Securities Law Prof Blog

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

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Thursday, December 6, 2012

SEC Charges Wells Fargo Banker with Insider Trading

The SEC charged John W. Femenia, an investment banker at Wells Fargo Securities, and nine others with involvement in an insider trading ring that garnered more than $11 million in illicit profits trading on confidential information about impending mergers.

The SEC alleges that Femenia misused his position at Wells Fargo to obtain material, nonpublic information about four separate merger transactions involving firm clients. According to the SEC, upon learning inside information about an impending deal, Femenia would typically call his longtime friend Shawn C. Hegedus, who worked as a registered broker. Femenia and Hegedus illegally tipped other friends who in turn tipped more friends or family members in a ring that spread across five states.  

According to the SEC’s complaint, the illegal trading occurred from July 2010 to July 2012 and involved the following transactions:

The acquisition of ATC Technology Corporation by GENCO Distribution Systems (publicly announced July 19, 2010)
 
The acquisition of Smurfit-Stone Container Corp. by Rock-Tenn Company (publicly announced Jan. 23, 2011)
 
The acquisition of K-Sea Transportation Partners by Kirby Corporation (publicly announced March 13, 2011)
 
The acquisition of The Shaw Group by Chicago Bridge & Iron Co. (publicly announced July 30, 2012)

The court entered a temporary restraining order freezing the assets of the defendants and relief defendants. The court order also provides for expedited discovery and prohibits the defendants and relief defendants from destroying evidence.

http://lawprofessors.typepad.com/securities/2012/12/sec-charges-wells-fargo-banker-with-insider-trading.html

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