May 31, 2013 — The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 initiated a whistleblower program within the Securities and Exchange Commission (SEC) so the agency could more efficiently gather and investigate tips from securities industry insiders with knowledge of insider trading. The Dodd-Frank Act allows whistleblowers to keep up to thirty percent of the funds recovered by the government based on tips received, provided that the amount recouped is more than $1 million.
$900,000 Settlement in Colorado Insider Trading Case
A prominent Colorado businessman has been charged by the SEC with insider trading after receiving nonpublic information from an oil and gas company CEO. According to the SEC, Scott Reiman received tips from Roger Parker, the CEO of Delta Petroleum, about a $684 million investment in the company by Tracinda, a private investment firm. Reiman is the president of Hexagon Inc., an investment firm in Denver, Colorado. In November and December 2007, Reiman purchased Delta stock or option contracts, on one occasion only minutes after a phone conversation with Parker. When the news of Tracinda’s investment in Delta went public on December 31, 2007, the value of Reiman’s portfolio of Delta securities jumped 20 percent.
To resolve the SEC’s allegations of insider trading, Reiman will pay almost $900,000. The SEC has previously charged Parker and Michael Van Gilder, another trader, in connection with the illegal insider trading involving Delta Petroleum.
Insider Trading Often Reported by Securities Industry Employees
It’s not easy to keep insider trading a secret, especially when tips are passed via email and text rather than phone or in-person meetings, as is often the case. When insider employees become aware of trading on nonpublic information, they often decide to come forward rather than ignore the illegal activity. Before notifying the SEC, however, government collaborators should learn all they can about their own rights under the Dodd-Frank Act. The securities fraud lawyers at Waters & Kraus have the experience to safeguard the interests of courageous informants. Contact us by email or call our whistleblower lawyers at 855.784.0268 to learn more about your rights under the Dodd-Frank Act.