SEC Says Houston Investor Relations Exec Traded Stock on Clients’ Confidential Data
The Securities and Exchange Commission filed suit July 26 in the U.S. District Court for the Southern District of Texas against the former chief executive officer of a Houston-based investor relations concern who allegedly engaged in insider trading in the securities of the firm’s clients (SEC v. Gray, S.D. Tex., 4:13-cv-2186, 7/26/13).
Defendant Stephen Gray is not represented by counsel, the SEC said.
Allegedly, Gray obtained confidential information about the companies while his firm was helping them draft press releases to announce earnings, mergers and acquisitions, and other key events. “Gray then traded on the basis of that material, non-public information for profits and avoided losses of more than $313,000 during a 13-month period,” the SEC said.
Allegedly, he disregarded the firm’s standard agreements with its clients to protect confidential information and to use it only for business purposes. Gray also allegedly “flouted the firm’s ‘statement of policy regarding securities trades’ that prohibited trading by firm personnel when in possession of non-public information about clients.”
Gray was fired in October after the firm learned about the SEC’s investigation, the commission said.
“As head of an investor relations firm that helped clients prepare announcements of material events, Gray had unique access to extremely sensitive and confidential information before the rest of the world received it,” David Woodcock, director of the SEC’s Fort Worth Regional Office. said in a release. “Gray boldly abused his position for the sake of illegal insider trading profits.”
The SEC is asking the court to order disgorgement plus prejudgment interest, civil penalties, and injunctive relief.
To see the complaint, go to http://www.sec.gov/litigation/complaints/2013/comp-pr2013-135.pdf.