December 7, 2016
Cap’n Cashbags: Insider Trading During a Board Meeting
– Broc Romanek
Recently, the SEC brought this SEC enforcement case with insider trading charges against a board member (who also happens to be a lawyer) who allegedly purchased securities of a target company during a board committee meeting where the not-yet-announced deal was being discussed. Here’s an excerpt from the SEC’s press release:
According to the SEC’s complaint, Cope learned confidential details about the planned merger during a board executive committee meeting on Jan. 5, 2016, and proceeded to place his first order to purchase Avenue Financial stock while that executive committee meeting was still in progress. He allegedly placed four more orders within an hour after the meeting ended.
As I mention during this 8-minute podcast, it’s about the craziest case I’ve ever heard – meaning that I can’t believe the director was that dumb. I call it the “Golden Ticket” for corporate secretaries as it’s a great way for them to scare directors when they provide insider trading reminders.
And what can be better than a reenactment of how this situation went down? In this 30-second video, a director places a trade with her broker to buy shares in the company being acquired while she is learning about the not-yet-announced deal: