Family Insider Trading
Family Insider Trading
Insider trading is well known as a violation of the federal securities laws. While many are not familiar with those statutes, insider trading has been discussed in films, news papers and other media, making it one of the more recognizable crimes. In addition, many companies have specific policies and procedures prohibiting the practice and the Commission has brought numerous cases, as has Department of Justice, based on insider trading. Yet it continues.
The Commission’s most recent case in the area centers on one family trading on inside information inside. SEC v. Perez, Civil Action No. 2:23-cv-08079 (C.D. Cal. Filed September 27, 2023). Named as defendants are: Marco Perez, an accounting manager from 2014 to 2021 at General Finance Corporation; Pedro Perez, Jr., an executive vice president of a privately held company and the brother of Marco; and Olivia Perez Durban, the sister of each Defendant.
In February 2021 Maro Perez learned that the world’s largest equipment rental company, United Rentals, Inc., was pursuing an acquisition of the storage business of his employer, General Finance. He used the information to trade despite the prohibition on such actions in the policies and procedures of his employer. Indeed, the General Counsel of the company had previously told him that all trades had to be pre-cleared. These were not.
Marco’s sister and brother followed, each trading in the securities of General fFnance. Following the deal announcement, the stock price increased 56%. Each Defendant sold the shares. The family had total profits of about $660,000. The complaint alleges violations of Exchange Act Section 10(b) and 14(e).
Each Defendant settled with the Commission. Marco Perez consented to the entry of a partial judgment enjoining him from future violations of the Sections cited in the complaint and agreeing to pay disgorgement, prejudgment interest and a penalty to be determined. The judgment also imposed a 5 year officer/director bar. Pedro Perez also consented to the entry of a permanent injunction based on the Sections cited in the compliant. He agreed to pay disgorgement and prejudgment interest of $141,251.79 and a civil penalty of $127,142.32. The judgement also imposed a five-year officer/director bar. Ms. Durbin consented to a similar injunction and agreed to pay disgorgement and prejudgment interest of $38,638.28 and a penalty of $34,867.17. The U.S. Attorney’s Office filed securities fraud charges against Marco Perez.