Monday, February 26, 2007
In an emergency federal court action filed on February 26 in S.D.N.Y., the SEC obtained a court order temporarily restraining Blue Bottle Limited, a Hong Kong company, and Matthew Charles Stokes, a citizen of Guernsey, from violating the antifraud provisions of the federal securities laws. The Judge also ordered a freeze of Blue Bottle's and Stokes's assets, as well as an order requiring them to repatriate funds transferred to overseas accounts.
The Commission's complaint alleges that Blue Bottle and Stokes, immediately prior to the publication of news releases by 12 different U.S. public companies, repeatedly traded in the securities of those companies, including options and equities trading. The Commission alleges that the defendants fraudulently gained access to material nonpublic information through hacking into computer networks or otherwise improperly obtaining electronic access to systems that contain information about imminent news releases and traded ahead of the public dissemination of that information, realizing profits of $2,707,177. The Commission further alleges that Blue Bottle and Stokes provided false information and used fake documents to open an account at the U.S. broker-dealer through which they executed the illegal trades.
The Commission alleges that the illegal trading, which began in early January 2007, was in the securities of the following 12 U.S. companies: AllianceBernstein Holding L.P., Allscripts Healthcare Solutions Inc., Achillion Pharmaceuticals Inc., BJ's Wholesale Club Inc., Brady Corporation, CACI International, Inc., Hornbeck Offshore Services, Inc., LeCroy Corporation, Millipore Corporation, Odyssey Healthcare Inc., Symantec Corporation, and RealNetworks, Inc.