In its relentless pursuit of illegal insider trading, the Securities and Exchange Commission filed charges against a former financial analyst at Stericycle, Inc. and his mother, who he allegedly tipped and who, in turn, traded on the material, non-public information as well.
In its charging papers, the SEC contends that in April 2016, Matthew Brunstrum (the son) learned from his employment that that Stericycle’s first quarter 2016 financial results would come in significantly lower than the street expected and then capitalized on this inside information by selling Stericycle securities prior to the earnings release and the stock’s decline. The SEC also claims that the son shared the company’s earnings data with his mother who, for her own financial benefit, traded on the inside information.
Stericycle’s stock plummeted $26.18 a share the day after Stericycle released its first quarter financial results, shedding around 22 percent of its value. The SEC’s complaint asserts that the son and mother avoided losses of $159,904 and $170,252, respectively.
The SEC complaint charges the mother and son duo with violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Insider trading is deemed to be fraudulent conduct under the securities laws. With neither admitting nor denying the allegations, the family members consented to permanent injunctions and agreed to repay to the SEC their avoided losses, plus interest.
In an interesting twist, the settlement provides that the civil penalty, which in a standard SEC insider trading settlement is typically the amount of the profit made (or in this case the loss avoided), would be left open and determined by the Court. While it is unclear why defendants would risk the Court imposing a larger civil penalty than the standard SEC settlement, perhaps they cooperated early and are betting that the Court will reward them for their efforts, or they are seeking a financial waiver assuming they are not financially able to pay all or a portion of the civil penalties. Or, perhaps, they are just hoping for a friends and family discount.
SEC defense lawyer David Chase is the principal of his securities law firm, David R. Chase, P.A., located in Fort Lauderdale, Florida. Mr. Chase, an SEC defense lawyer, defends SEC and FINRA investigations and enforcement actions throughout the nation. If you are under SEC investigation or FINRA inquiry, and need an insider trading defense attorney call SEC defense lawyer David Chase for a confidential, no-cost initial consultation at: (800) 760-0912, or you may contact Mr. Chase at: email@example.com.