A New York-based investment banker for Wells Fargo Securities and nine others have been civilly charged by the Securities and Exchange Commission with insider trading, after it was allegedly discovered that he was passing confidential information to a "phone tree" of his friends and their friends.
Although news reports do not specify the names of all nine involved in the conspiracy, the 30-year-old investment banker apparently passed non-public information about upcoming mergers to a friend who was a stockbroker. Then, the two sent the information to other friends and family members, investigators claim.
Together, the group involved in the alleged conspiracy is accused of illegally obtaining more than $11 million in unlawful profits from several merger transactions. Even more troubling, one member of the group allegedly gave the young investment banker a portion of his gains in exchange for the private information.
"Here you have an investment banker who clearly knew better that inside information can't form the basis of trading decisions," the SEC's associate director for enforcement in its Atlanta office, said in a statement. "Instead he basically started a phone tree of nonpublic information to enrich friends and others."
Wells Fargo released a statement saying that it only learned of the conspiracy allegations a day before they were announced to the press and that is cooperating fully with the SEC investigation.
The SEC and many other federal agencies have the ability to file civil enforcement complaints as well as criminal charges. Civil enforcement against individuals often seeks financial penalties, as does criminal enforcement against companies. Criminal charges brought by federal agencies may seek financial penalties, but typically also seek incarceration. Even the accusation itself can be ruinous to the accused person's reputation and ability to work in the industry.
If you believe you may be under investigation for conspiracy, insider trading, or another white collar crime, it is essential to contact an experienced criminal defense attorney immediately so you can begin to defend yourself early in the process.
Source: New York Times, "Wells Fargo Banker and 9 Others Charged With Insider Trading," Dec. 5, 2012