Mary Joe White became the thirty first Chairman of the Securities and Exchange Commission today. She was sworn in yesterday after being confirmed by the Senate. Ms. White, a prominent white collar lawyer and former U.S. Attorney for the Southern District of New York has promised to make SEC Enforcement unrelenting while moving swiftly through the unfinished rule making tasks before the agency.
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SEC Enforcement amended its complaint against Tai Nguyen, the founder and owner of Insight Research, to add his sister, Thanhha Bao as a defendant. Mr. Nguyen were tied to the expert network insider trading cases. Ms. Bao was formerly employed in the finance department of Abaxis, Inc. where she helped prepare quarterly earnings releases. She was charged with having repeatedly tipped her brother in advance of Abaxis earnings releases. Her brother then traded for his own account, reaping about $145,000 in profits over a period of several years. SEC v. Nguyen, Civil Action No. 12-CV-5009 (S.D.N.Y. Amended complaint filed April 8, 2013).
At the time the Commission brought the original case against Mr. Nguyen, the U.S. Attorney in Manhattan filed parallel criminal charges. U.S. v. Nguyen (S.D.N.Y. June 26, 2012). In the two cases Mr. Nguyen was charged with having traded in the securities of Abaxis on inside information on at least seven occasions between 2006 and 2009 in advance of earnings announcements. The complaint did not name the source of the inside information.
The complaint also alleged that Mr. Nguyen tipped two other funds. One was Sonar Capital, an investment adviser based in Boston that advised several hedge funds. That firm reaped profits and avoiding losses totaling over $5.4 million. Noah Freeman, a managing director of that firm pleaded guilty to criminal charges and settled with the SEC in a parallel civil case. U.S. v. Freeman, 11-cr-116 (S.D.N.Y.); SEC v. Longoria, Civil Action No. 11-cv-0753 (S.D.N.Y.).
The other was Bari Capital, the founder of which is Samir Barai, who pleaded guilty in the expert network cases and was named as a defendant in the parallel SEC enforcement action. Bari Capital had trading profits of over $1.7 million. Mr. Barai pleaded guilty to criminal charges and settled with the Commission in a parallel civil case. U.S. v. Barai, 11-cr-116 (S.D.N.Y.); SEC v. Longoria.
The SEC’s complaint against Mr. Nguyen, and the amended complaint his sister, Ms. Beo, allege violations of Securities Act Section 17(a) and Exchange Act Section 10(b). Ms. Beo agreed to settle with the Commission, consenting to the entry of a permanent injunction prohibiting future violations of the Sections cited in the complaint. She also agreed to pay a civil penalty of $144,910 and to be barred from serving as an officer or director of a public company for five years.
Her brother previously pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud in connection with an insider trading scheme. As part of the plea he agreed to forfeit the proceeds of the offense. He was also named as a defendant in SEC v. Longoria.