United States: SEC Charges Emoji User With Insider Trading
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The SEC has accused two people of trading in material, nonpublic information from a company’s confidential earnings meeting.
In a lawsuit filed in the Northern District Court of Illinois, the SEC alleged that a company employee learned inside information – that profits were significantly higher than the company’s forecast – while attending a non-public internal company meeting. He then shared the information with a second person who was a close friend and former colleague. The friend took advantage of this by buying call options based on the information and then liquidating the options when profits were announced. The SEC complaint highlighted the use of an emoji in communications between the alleged miscreants.
The SEC charged the two individuals with violating Exchange Act Section 10(b) (“Regulation of the Use of Manipulative and Deceptive Devices”) and SEA Rule 10b-5 (“Use manipulative and deceptive devices”), and sought civil penalties. and a permanent injunction to prevent further violations.
Both individuals also face criminal charges from the U.S. Attorney’s Office in the Northern District of Illinois.
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