Dive Brief:
- Bay Area finance employee Mounir Gad and a friend, Nathan Guido, were charged with insider trading earlier this week by the Securities and Exchange Commission.
- Gad worked for a Northern California-based bank in its group that assisted private equity firms in financing acquisitions of companies. On three occasions in 2015 and 2016, he tipped Guido using material, nonpublic information about upcoming acquisitions, which Gad learned about in the course of his employment.
- Gad used an encrypted messaging platform and code words to provide the tips to Guido.
Dive Insight:
According to the SEC, Guido bought stock in the target companies based on Gad’s tips and sold the stock after the acquisitions were announced, resulting in illegal gains of $51,700.
Guido shared about $11,000 of these gains with Gad by giving him cash.
“Gad had an obligation to keep his firm’s client deal information confidential,” said Erin Schneider, director of the SEC’s San Francisco regional office. “He betrayed that trust by allegedly sharing information with Guido who used it unfairly to profit from market-moving news.”
The SEC’s orders find that Gad and Guido violated antifraud and tender-offer provisions of the Securities Exchange Act of 1934. Gad agreed to pay a civil penalty of $51,700, and Guido, who is credited with cooperating with the SEC, to pay a civil penalty of $40,700.
