We’ve seen a few cases of trading on material, non-public information sprouting from spouses working at home. We just got another one, with a twist.
Most recently, we had the case of a BP manager having her spouse spy on the merger activity she was working on for her company. That husband is tied up with criminal charges and a divorce. [The One with the Divorce]
In today’s case, Ms. Perez de Madrid checked out her husband’s computer screen while he was out of the room. He was a lawyer for an international, research-focused biopharmaceuticals private company in connection with its acquisition of global, commercial-stage biopharmaceutical company with ADS shares listed on NASDAQ. She promptly bought shares in the acquisition target. A few weeks later the value of the shares doubled when the acquisition was announced.
What to do with a $300 thousand windfall? Rather than go on a secret spending spree she told her husband. Since he was a lawyer, I assume he immediately knew there was a problem. He knew she could face jail time.
They kept the money in the account and reported the illegal activity to the Securities and Exchange Commission. Clearly, the SEC likes problems to be self-reported. The penalty was only disgorgement of the gains and a small interest payment. No jail time. No penalty.
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