Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, October 5, 2011

SEC Settles Insider Trading Charges Against Former Investment Bank Exec

The SEC settled insider trading charges against Richard A. Hansen, the former Chairman of Keystone Equities Group, a registered broker-dealer and regional investment bank. According to the SEC, Hansen received illegal tips concerning pending acquisitions from his then-employee and close personal friend Donna Murdoch.  Murdoch, in turn, had learned of the acquisitions through her close personal relationship with James Gansman, then an Ernst & Young (“E&Y”) partner who worked on the transactions for E&Y clients.  Hansen also passed on one of the tips to his longtime friend Stuart Kobrovsky, a retired stockbroker, who likewise traded.

Without admitting or denying the allegations—except to the extent they are embraced by his guilty plea and conviction in the parallel criminal case —Hansen has agreed to settle the Commission’s allegations against him.  The final judgment to which Hansen consented would further order that he is liable for a combined total in disgorgement and prejudgment interest of $63,038, of which $32,222 would be deemed satisfied by the order of criminal forfeiture entered against Hansen in the parallel criminal case, leaving a balance due of $30,816. Finally, the Final Judgment would bar Hansen permanently from serving as an officer or director of any public company. Additionally, Hansen consented, in related administrative proceedings, to the entry of a Commission order that would bar him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, or from participating in any offering of a penny stock.

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