David R. Chase, P.A.
Call Us Now: 800-760-0912
David R. Chase, P.A.
Call Us Now: 800-760-0912


SEC Brings Insider Trading Charges Against Former BP Senior Manager 

insider trading subpoena

The U.S. Securities and Exchange Commission recently filed insider trading charges against Chicago based Kevin Crotty in connection with trading in advance of a publicly released announcement on  February 16, 2023 that BP had agreed to acquire TravelCenters of America.  This SEC insider trading enforcement action marked the second civil action the SEC has brought involving trading on material, nonpublic information in advance of this BP acquisition.

The SEC complaint alleged Crotty misappropriated inside information from a BP friend who was involved in the planned corporate acquisition.  The SEC further contends that subsequent to learning that there was a very likelihood that the acquisition would be consummated, Crotty bought over 848 TravelCenter shares the day before the acquisition announcement.  The next day TravelCenters publicly announced the acquisition and the market reacted with a 70% spike in TravelCenters stock price, which translated into a $30,000 unrealized profit for Crotty.

In its complaint, the SEC sued Crotty for violations of the antifraud provisions of the federal securities laws, to wit: Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.  In agreeing to settle the SEC’s insider trading charges, which is contingent upon the court’s approval, Crotty, with neither admitting nor denying the SEC’s allegations, consented to a final judgment in which he will be enjoined from committing future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  Additionally, the court’s final judgment would order an officer and director bar that prohibits Crotty from serving as an officer and director of a publicly traded company, as well as a requirement that he disgorge his unrealized profit of approximately $30,000 generated from the alleged illegal insider trading, in addition to a nominal amount of prejudgment interest and a one-time civil monetary penalty of approximately $30,000, which is the amount of the disgorgement sum.

Unfortunately for Crotty, federal criminal charges were brought against him in a parallel action by the U.S. Attorney’s Office for the Northern District of Illinois.  While he financially profited very little from his alleged insider trading, the criminal charges were likely driven by the quality of the inculpatory evidence against Crotty, in particular the identification of the source of the material, nonpublic information (his BP colleague), as well as the timing of his trading – one day prior to the acquisition announcement.

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David Chase, Esq. is a former SEC Enforcement Attorney and has for the last 25 years defended individuals in SEC insider trading investigations around the country.  You may contact him toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com to discuss your insider trading subpoena, and can visit the Firm’s website for more information and content on insider trading investigations and how to successfully defend them at: www.davidchaselaw.com.

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