Securities Law Prof Blog

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

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Friday, May 24, 2013

SEC Charges Dallas Trader with Front-Running

The SEC announced fraud charges and an asset freeze against Daniel Bergin, a senior equity trader at Cushing MLP Asset Management, a Dallas-based investment advisory firm, who allegedly profited by placing his own trades before executing large block trades for firm clients that had strong potential to increase the stock's price.

According to the SEC, Bergin secretly executed hundreds of trades through his wife's accounts in a practice known as front running. Bergin illicitly profited by at least $520,000 by routinely purchasing securities in his wife's accounts earlier the same day he placed much larger orders for the same securities on behalf of firm clients. Bergin concealed his lucrative trading by failing to disclose his wife's accounts to the firm and avoiding pre-clearance of his trades in those accounts. Bergin also attempted to hide his wife's accounts from SEC examiners.

According to the SEC's complaint, Bergin realized at least $1.7 million in profits in his wife's accounts from 2011 to 2012 as a result of his illegal same-day or front-running trades. More than $520,000 of the $1.7 million represents profits from approximately 132 occasions in which Bergin placed his initial trades in his wife's account ahead of clients' trades.

The SEC's complaint names Bergin's wife Jacqueline Zaun as a relief defendant for the purpose of recovering Bergin's illegal trading profits in her accounts.

http://lawprofessors.typepad.com/securities/2013/05/sec-charges-dallas-trader-with-front-running.html

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