The U. S. Securities and Exchange Commission (SEC) filed insider trading charges against Robert Brian Thompson, a senior banking supervisor and examiner at the Federal Reserve Bank of Richmond, for insider trading in stock and options of two publicly traded banks that were under his supervisory purview.
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Virginia, charges Thompson with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The SEC complaint alleges that Thompson, a resident of Moseley, Virginia, was a senior employee at the Federal Reserve Bank– one of twelve regional Federal Reserve banks that supervise and regulate the U.S. banking system under the oversight of the Board of Governors of the Federal Reserve System. Per the SEC’s allegations, he had regular access to a plethora of material, nonpublic information concerning numerous publicly traded banks, including unreleased earnings data, capital, liquidity, risk levels, as well as bank examinations records, stress tests and other regulatory events. For that reason, the Federal Reserve’s policies and procedures required Thompson to keep confidential (and not use for any non-official purposes) all nonpublic information obtained through his work.
On October 23, 2023, Thompson obtained a preview of an upcoming positive earnings announcement by Capital One, one of the banks in his supervisory portfolio. Based on that information, Thompson allegedly bought $678,000 worth of the bank’s stock hours before the scheduled announcement, which resulted in $79,346 of ill-gotten profits. The SEC’s complaint further alleges that, in January 2024, Thompson learned that NYCB, a different bank in his supervisory portfolio, would be disclosing unexpected loan losses worth hundreds of millions of dollars as part of an upcoming earnings announcement. Thompson allegedly personally leveraged that material nonpublic information to buy thousands of options on the bank’s stock two days before the scheduled announcement, which permitted him to reap $505,527 in ill-gotten profits.
Each year, Thompson was required to complete an annual certification form acknowledging the trading restrictions and disclosing, among other things, any bank securities holdings as well as any actual or apparent conflicts of interest or violations of law or Federal Reserve policy. Thompson submitted his required annual certification form for fiscal year 2023, reporting that he held no bank securities, had no actual or apparent conflicts of interest, and had committed no violations of law or of Federal Reserve policy. However, as of the date of his certification, Thompson held bank stock and options with a market value exceeding $500,000, none of which he reported.
Without admitting or denying the charges, Thompson consented to the entry of an injunction of disgorgement with prejudgment interest and civil penalties, if any, enjoining him from committing future violations of the charged antifraud provisions. The settlement is subject to Court approval. Thompson also pleaded guilty to criminal charges in a parallel action brought by the U.S. Department of Justice’s Criminal Division Fraud Section and the U.S. Attorney’s Office for the Eastern District of Virginia.
Are You Facing An SEC Insider Trading Charge?
SEC insider trading defense attorney David Chase, Esq. of the Law Firm of David R. Chase, has achieved successful results for his clients under SEC investigation for stock manipulation including spoofing, insider trading, and crypto fraud. David previously investigated and prosecuted securities fraud for the SEC. If you received a SEC Subpoena and need legal counsel from an experienced SEC defense attorney, contact David at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. Visit the Firm’s website for valuable content and to review the firm’s prior successful SEC defense results at: www.securitiesfrauddefense.net. Representation is nationwide, including Phoenix, Dallas, St. Louis or Los Angeles.
