Commission Files Settled Insider Trading Case
Insider trading has always been a focus of SEC enforcement. The reason is straight forward – at its core, insider trading is theft. The violation centers on obtaining inside information which is typically used to aid or foster the underlying business transaction for those involved with it. Those who have the information know full well that material non-public knowledge about the transaction is intended to further the business transaction, not help build the personal bank account of those with the information by getting “one up” on others in the market place.
While these basic principles are well known, and the Commission has vigorously prosecuted insider trading, it continues – everyone thinks they are the one who will not get caught. The Commission’s latest case in this area is SEC v. Rebeiz, Civil Action No. 25-cv-0124 (S.D. Cal. Filed Jan. 21, 2025).
Named as defendant is Gabriel Rebeiz, an electrical engineering professor at the University of California, San Diego. He has been a consultant to several public companies that produced radio frequency filters. He also co-founded Extreme Waves, LLC, a private entity in the radio frequency industry.
At the center of this action was Resonant Inc., a Delaware company based in Goleta, California until March 2022 when the firm was acquired by a Murata subsidiary. The firm designed radio frequency filters used by mobile handset and wireless devices. In 2014 the firm became a Commission reporting entity. Its shares and ADRs traded on OTC Markets Group.
Defendant Rebeiz was a technology consultant. He served on the Technical Advisory Committee of Resonant Inc. As a result of his role at Resonant, Defendant has access to proprietary information relating to the quality of the firm’s technology. This led Defendant to encourage management to sell the company. A few weeks before the announcement of a deal Defendant was told by a senior firm executive that there was an impending acquisition transaction.
The next day Mr. Rebeiz began acquiring shares of the company. Following the deal announcement in February 2022, the share price increased by 257%. Mr. Rebeiz had profits of $360,673. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. Defendant resolved the matter, consenting to the entry of a permanent injunction and an officer/director bar. In addition, Mr. Rebeiz agreed to pay disgorgement of $360,673, prejudgment interest of $65,560 and a penalty of $360,673. See Lit. Rel. No. 26231 (Jan. 22, 2025).