Cameron Associates employee required to abstain from trading after making illegal gains of $11,776
The SEC has charged a partner at New York investor relations firm Cameron Associates with insider trading, accusing him of using privileged information to make $11,776 in illegal gains or through loss avoidance.
Kevin McGrath is said to have bought stock in Clean Diesel Technologies before it announced an increase in orders that doubled its stock price. The SEC also says McGrath sold shares in medical device manufacturer Misonix before the company announced earnings that fell below expectations.
The SEC suggests McGrath bought 1,000 shares of Clean Diesel stock in May 2011 minutes after he learned from a press release he had worked on that a new $2 mn product order would be issued the next day. He stood to make $6,376 when the company’s stock jumped 95 percent.
The regulator says McGrath also sold Misonix stock before the issue of another press release, this time announcing that the company’s earnings were below expectations. McGrath managed to avoid a loss of $5,400; Misonix’s stock fell by 22 percent.
McGrath has since agreed to pay a disgorgement of $11,776 plus prejudgment interest of $1,492 and a penalty of $11,776, for a total charge of $25,044, the commission says in a press release. He is also obliged to abstain from trading in the stock of any company for which he or his company has provided investor relations services until a year after said services have ended.
‘Investor relations firms owe their clients a duty to maintain in strict confidence the important and sensitive information clients impart for the sole purpose of obtaining help and advice on how best to communicate forthcoming news to investors,’ says Andrew Calamari, director at the SEC’s New York office. ‘McGrath’s self-centered misconduct betrayed both his own firm and his firm’s clients whose confidential information he exploited for personal gain.’
McGrath neither admitted nor denied the accusations, the SEC says. Besides the financial penalties, McGrath is now obliged to seek written permission from clients before selling any shares they give him as compensation for his services.
