Federal Jury Finds Stockbroker Innocent of Insider Trading Charges
(Washington, DC) – A federal jury in Kentucky has exonerated a former stockbroker on charges of insider trading.
The civil case, filed by the Securities and Exchange Commission in 2000, charged the stockbroker with four counts of insider trading for allegedly using insider information to earn more than $47,000 in profits. On March 5, after a week-long trial, the jury found in favor of the stockbroker on all counts.
The SEC’s suit stemmed from a 1998 scheme involving a graphic design artist hired as a temporary employee by two prominent New York investment banks. The employee stole insider information about upcoming mergers and acquisitions from the banks’ computer systems and from employees’ desks and trash cans, and subsequently disclosed the information to individuals in New York and, through an Internet chat room, to others in Kentucky and West Virginia. This was the first insider trading case filed by the SEC that involved the use of the Internet to disseminate the information.
The Kentucky stockbroker - along with 18 other individuals - originally faced criminal charges as a result of the scheme. Federal authorities dismissed the criminal charges against the broker in 2000; the other defendants either pled guilty or were convicted. Those sentenced in the case received as much as 50 months in prison. The SEC filed a civil insider trading case to recoup the broker’s alleged profits, and sought other financial and administrative penalties that would have barred the broker from working in the financial services industry.
Partner Terence J. Lynam and counsel Jeffrey M. King of Akin Gump Strauss Hauer & Feld LLP tried the case on behalf of the stockbroker. Mr. Lynam commented, “We obtained a dismissal of the criminal charges against our client because they were baseless; I am very pleased that the jury has agreed that the civil charges were baseless as well.”
Founded in 1945, Akin Gump Strauss Hauer & Feld LLP, a leading international law firm, numbers more than 900 lawyers with offices in Albany, Austin, Brussels, Chicago, Dallas, Houston, London, Los Angeles, Moscow, New York, Northern Virginia, Philadelphia, Riverside, Riyadh (affiliate), San Antonio, San Francisco and Washington. The firm has a diversified practice and represents regional, national and international clients in a wide range of areas, including antitrust; banking and financial institutions; capital markets; communications; corporate and securities; employee benefits; energy, land use and environment; entertainment; estate planning, wealth transfer and probate; financial restructuring; government contracts; health; insurance; intellectual property; international; investment management; labor and employment; litigation; mergers and acquisitions; privatization; project development and finance; public law and policy; real estate and finance; taxation; and technology.
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