Federal Insider Trading Investigation Expands

by Christopher Freeburn | December 11, 2012 11:37 am

NYSE traders on trading floor[1]The Securities and Exchange Commission (SEC) and the Manhattan U.S. Attorney are expanding inquiries into how corporate CEOs buy and sell their own company’s shares[2].

Unnamed sources told the Wall Street Journal that the SEC is reviewing trades of Verifone Systems (NYSE:PAY[3]) shares by company CEO Douglas Bergeron. The SEC is also investigating the trading activity of Big Lots (NYSE:BIG[4]) CEO Steven Fishman. Both Verifone and Big Lots denied any wrongdoing by their CEO’s.

Other companies whose CEO trades are being examined include Body Central (NASDAQ:BODY[5]), Cardtronics (NASDAQ:CATM[6]), Micrel (NASDAQ:MCRL[7]), Mohawk Industries (NYSE:MHK[8]) and Cobalt International Energy (NYSE:CIE[9]).

Many of the CEOs under examination by federal regulators used prearranged share trading plans called “10b5-1” plans, which arrange to sell or buy shares at specified future dates and times. The advanced scheduling allows CEOs to trade their companies’ shares even though they hold inside information. Trades based on information not publicly disclosed is illegal.

The Wall Street Journal noted that a number of executives had made highly profitable share trades in advance of share-price affecting announcements by their companies.

  1. [Image]: http://investorplace.com/wp-content/uploads/2011/07/NYSE_traders_trading_floor_watch_630_flickr.jpg
  2. inquiries into how corporate CEOs buy and sell their own company’s shares: http://online.wsj.com/article/SB10001424127887323339704578171703191880378.html
  3. PAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAY
  4. BIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=BIG
  5. BODY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BODY
  6. CATM: http://studio-5.financialcontent.com/investplace/quote?Symbol=CATM
  7. MCRL: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCRL
  8. MHK: http://studio-5.financialcontent.com/investplace/quote?Symbol=MHK
  9. CIE: http://studio-5.financialcontent.com/investplace/quote?Symbol=CIE

Source URL: http://investorplace.com/2012/12/federal-insider-trading-investigation-expands/
Short URL: http://invstplc.com/1fr4cAa