March 2, 2015 — Financial analysts are entrusted with sensitive information concerning their employers’ business dealings. Trading on that nonpublic information for personal gain is a crime. To fight illegal insider trading, the U.S. Congress set up a whistleblower program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Tipsters who notify the Securities and Exchange Commission (SEC) about illicit insider trading may be rewarded for their courage in collaborating with the agency. Whistleblowers could receive up to thirty percent of the amount the government recovers based on the informant’s information, provided the amount exceeds $1 million.
SEC Alleges that One Man Provided Confidential Information, Another Placed the Trades, a Third Provided the Brokerage Account and a Fourth Was a Friend who Joined in on the Insider Trading Scheme
Four men have been charged in a Northern California insider trading ring:
- John Gray, a former Barclays Capital analyst;
- Christian Keller, who worked in finance for two Silicon Valley-based public companies;
- Kyle Martin, Gray’s friend with a brokerage account; and
- Aaron Shepard, Gray’s friend who received tips from Gray that allowed him also to trade in advance of public announcements.
Together, the four men made almost $750,000 in illegal trading ahead of four corporate news announcements. Gray, Keller, Martin, and Shepard will resolve the SEC’s charges by paying a combined total that exceeds $1.6 million.
The operation reportedly began when Gray and Keller started trading on information that Keller learned during his employment with Applied Materials Inc. as a financial analyst. In 2009, Gray and Keller traded ahead of Applied Materials’ merger with Semitool Inc. Later, in 2011, the two men traded ahead of the company’s acquisition of Varian Semiconductor Equipment Associates.
In 2012, Keller became a vice president for investor relations and finance with Rovi Corporation. Gray and Keller continued their insider trading operation with confidential information about Rovi’s forthcoming unfavorable news announcements. The men made trades in advance of Rovi’s first and second quarter 2012 financial results.
Gray is the one who primarily placed the trades using Martin’s brokerage account. Gray paid cash kickbacks to Keller once they realized profits on the trades. To hide the scheme, the men communicated with prepaid disposable phones and shared their profits by making structured cash withdrawals.
Contact Us to Notify SEC of Insider Trading
While Waters & Kraus is not handling this particular example of insider trading, we are representing whistleblowers in similar qui tam matters. If you have comparable claims against a co-worker or anyone else engaged in insider trading, contact us by email or call our qui tam attorneys at 800.226.9880 to learn more about our practice and how we can work together to notify the government about fraud and abuse. Our qui tam lawyers, like George Tankard and Anne Izzo in the firm’s Maryland office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.
