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U.S. SEC Charged Seven Individuals with Insider Trading

U.S. SEC (Securities and Exchange Commission) Charged Seven Individuals with Insider Trading
U.S. SEC (Securities and Exchange Commission) Charged Seven Individuals with Insider Trading

On Wednesday, Security and Exchange Commission (SEC) caught seven individuals who were involved in inside trading by generating a profit of over $5 million. SEC charged the individuals for trading the confidential information related to dozens of delayed corporate transactions. The profit was being generated based on the tips from Bank of America Corp (BAC) employee.

Traders reportedly made an attempt to evade detection of SEC trade surveillance by utilizing code words, shell companies and encrypted texting apps that were self-destructive. Still, SEC Market Abuse Unit Analysis employed advanced data analyzing tools to detect suspicious activities and dubious patterns including the very unlikely successful trading behavior past different securities through time.

SEC alleged Daniel Rivas, who was vice-president in IT department of BAC, for exploiting his right to use bank’s computer system by tipping four other individuals who were involved in trading the confidential information. Beside Rivas, others were also involved in the unlawful business of tipping and trading information. The reports notify that traders have profited from market-moving news related to 30 pending corporate deals in between October 2014 and April 2017.

Rivas tipped James Moodhe, who was working as a treasurer & assistant-controller at Tullet Prebon (the global interdealer brokerage firm), for trading information via coded texts and personal meetings to give tips to Micheal Siva, the financial advisor at Tullet Prebon and a friend of Moodhe. Siva, in turn, manipulated the information to get profit from his clients and earn extra commission.

James Moodhe, who was actually father of Rivas’ girl-friend, was pleaded guilty along with Rivas to the charges of illegal trade as well as for fraud and conspiracy statements to FBI agents. Rest of the 5 defendants have been arrested on Wednesday and were charged with 54-count indictment. All of the seven defendants are facing civil charges of US Securities and Exchange Commission.

Riva’s two friends, Roberto Rodriguez and Rodolfo Sablon, who were living in Florida, oftentimes discussed tips using encrypted texting application and also manipulated shell companies for carrying out insider trading. They together made aggressive-option trades that converted ‘less than $100,000 into more than $2 million as a profit’.

Prosecutors revealed that Rivas, the master mind in trading game, leaked nonpublic and unofficial information related to potential mergers, the acquisitions and other tender offers that involved prospective clients for over 50 times to the co-conspirators, who traded on tips.

The three overlapping trading schemes from Aug 2014 to April 2017 involved transactions over take-overs of St. Jude Medical Inc. by ABT .N and Monsanto Co by Bayer AG (BAYGn. DE), reveal authorities. SEC reported thirty transactions made during the time period.

Rivas has now been suspended by RBC. Sablon’s lawyer has commented that he is, right now, reviewing the indictment. Other defendant’s lawyers have not commented or responded so far.

From one perspective, it’s an achievement on part of SEC that detected the anomalous behavior and tracked down all the persons involved in unlawful insider trading. On the other side, the outcomes of court trials will definitely alert the hacker’s community as well as those involved in trading of information.

The self-destructive texting applications that were manipulated by Rivas and others signify how destructive some of the conveniences can be that were basically developed to maintain privacy of individuals and business’s information.

About the author

Samina Fazal

She is an expressionist by nature and radical thinker by thought. she has worked as an Assistant editor at Youth Times and as writer at Self projections. She is an M-Phil in English Literature and a great researcher. She has an eagle eye on the current affairs of the world and now she is part of Expert Legal Review as International Assistant Editor.