By Jason Robinson, Spring 2015 Student Intern
On February 5, 2015, the Securities and Exchange Commission charged four individuals with violating insider trading laws. At the center of the allegations are John Gray and his friend Christian Keller. Gray worked as an analyst at Barclays Capital and his friend Keller worked in finance at two public companies based in Silicon Valley. Two other participants in the alleged insider trading, Aaron Shepard and Kyle Martin, were tipped off and made the trades before the information was made available to the public. Gray and Keller allegedly used the other two men to execute the illegal trades in order to conceal the identity of the source of the insider information.
The SEC’s charges stem from information that Keller learned of while working at Applied Materials Inc. and Rovi Corporations. Keller allegedly learned that Applied Materials Inc. was planning on acquiring Semitool Inc. and Varian Semiconductor. After leaving Applied and joining Rovi Corporations, Keller then learned of his new company’s forthcoming negative financial results and used this information to trade.
Ultimately, the four men agreed to settle the charges and pay the SEC a combined $1.6 million. In what has become common on Wall Street, the four men agreed to make the payments to settle the case without admitting or denying the allegations. On top of disgorgement of gains, Gray also agreed to a bar from the securities industry. Keller agreed to a ban from serving as an officer or director of a public company for ten years. Martin and Shepard also paid disgorgement penalties but were not assessed any additional penalties for their part in the trading scheme.
To read more on the charges or to access the full complaint click here.