You have reached your limit of free articles this month.

Enjoy unlimited access to myAJC.com

Starting at just 99¢ for 8 weeks.

GREAT REASONS TO SUBSCRIBE TODAY!

  • IN-DEPTH REPORTING
  • INTERACTIVE STORYTELLING
  • NEW TOPICS & COVERAGE
  • ePAPER
X

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and bonus content- exclusively for subscribers. Starting at just 99¢ for 8 weeks

X

Welcome to myAJC.com

This subscriber-only site gives you exclusive access to breaking news, in-depth coverage, exclusive interactives and bonus content.

You can read free articles of your choice a month that are only available on myAJC.com.

SEC’s Atlanta office: Illegal overseas trading scheme nets $3.6 million


Investigators at the U.S. Securities and Exchange Commission’s Atlanta office said Tuesday that they obtained freezes on two overseas accounts holding more than $3.6 million in alleged illegal profits from insider trading.

The money, in two accounts in London and Singapore, stem from allegedly illegal profiteering on inside information that traders got ahead of SoftBank’s deal to buy Fortress Investment Group, a New York money management firm.

Such trading on “material” information typically known only to company executives and other insiders is a violation of federal securities laws. Such schemes can be as simple as an executive passing a illegal tip to his golf buddies, or involve conspiracies stretching around the globe.

The SEC said account freezes will ensure that the unknown traders, believed to be overseas, can’t remove any allegedly illegal profits before the agency completes its investigation.

“The detection and prosecution of insider trading continues to be a high priority in this office,” said Walter Jospin, director of the SEC’s regional office in Atlanta. The SEC said the “expedited investigation” is being handled by a team of six people in the Atlanta office. The SEC filed its complaint in federal district court in New Jersey on Friday.

The SEC said it detected suspicious trading activity when SoftBank, a Tokyo telecom giant that controls Sprint Corp. in the U.S., announced its $3.6 billion deal to buy Fortress after the U.S. stock markets closed on Feb. 14. In an all-cash deal, SoftBank offered $8.08 per share, a 30 percent premium over Fortress’ market value before the announcement.

But by then, according to the SEC, the traders had bought Fortress stock and securities known as “contracts for difference” that would allow them to make out-sized profits on changes in Fortress’ stock price.

Working through a brokerage account in Singapore, the traders had begun buying Fortress stock on the same day the deal was announced, about 30 minutes after Fortress’ board of directors got an email of draft resolutions to approve the deal, according to the SEC’s complaint.

The traders sold their Fortress stock one day after the deal was announced, making a profit of nearly $1.7 million.

Likewise, the SEC said in its complaint, traders working through the London account began buying the “contracts for difference” securities on Fortress stock, or CFDs, just before Feb. 12, when Fortress’s board initially expected to approve the deal. The traders bought more CFDs on Feb. 13 and Feb. 14, ahead of the deal’s announcement later that day, according to the SEC.

The traders sold most of their Fortress investment the next day, reaping a $1.9 million profit, the SEC said.



Reader Comments ...


Next Up in Business

Woodward Academy: Q&A with visual arts teacher Andy Cunningham

Andy Cunningham finds it strange to say out loud that he’s worked for Woodward Academy for 32 years. When he joined the city’s oldest private college preparatory school in 1985, he had no plan to be a high school teacher. Cunningham, who holds a bachelor’s degree and MFA from Georgia State University, was the first black male on faculty...
Executives believe in collaboration, balance

The leaders of the top small, midsize and large workplaces shared what makes them proud and advice for companies trying to improve their corporate culture. Answers have been edited for brevity and clarity. Q: What are key components of the company’s culture? Pat Flood, regional operating partner, Supreme Lending’s Southeast region: Our...
Woodward Academy: Top Large Workplace

Students and faculty whiz around President Stuart Gulley in the foyer of the light-filled renovated Thalia N. Carlos Science Center, which re-opened in 2016 at Woodward Academy in College Park. During a change in classes, Gulley stops a student dressed in a blue blazer and khakis, Woodward’s school uniform, and brags about his success in a recent...
What AutomationDirect.com employees say

AutomationDirect.com ADC provides a spectacularly positive work environment and provides a frequent and detailed vision for the company! ADC is, hands-down, the best place I have ever worked! I am given complete freedom in deciding how to execute my work and the company provides the best resources to get the job done. The company culture is most inclusive...
AutomationDirect.com: Q&A with Leisa Cudworth in product management

Leisa Cudworth often uses her lunch hour to exercise. It’s easy for her to work up a sweat since AutomationDirect.com has onsite exercise programs and facilities. “You get to do it at lunch or different times (of the day), so when evening comes, you get to go home to your family,” she said. Cudworth, who has worked her way from inside...
More Stories