by T. GormanPosted on Posted in SECActions

The SEC filed another settled insider trading action, charging a corporate executive. The action is not remarkable and is straight forward. What makes it noteworthy, however, is that the case is the fourth insider trading action brought as an administrative proceeding dating back to just before the holidays. In the Matter of Reid A Hackney, CPA, Adm. Proc. File No. 3-17-47 (January 12, 2016).

Mr. Hackney served as the Chief Financial Officer and Senior Vice President of the Dress Barn subsidiary of Ascena Retail Group, Inc. from November 2011 through March 2012. He was designated as a key employee. As such he was subject to the insider trading policies of the firm as well as additional restrictions on his trading.

On January 1, 2012 Mr. Hackney was notified in an email of the weekly and monthly sales figures for the firm’s subsidiaries. The comparable sales for the month of December had increased 12%.

Two days later Mr. Hackney purchased 15 Ascena call options. The expiration date was January 21, 2012. On January 5, 2012 the firm issued a press release announcing strong holiday sales and raising EPS guidance. The stock closed up 5.64%. Mr. Hackney sold his call options, realizing profits of $3,300.

By late March 2012 the company had taken substantial steps toward a cash tender offer for all of the shares of Charming Shoppers common stock. On or before March 27 Mr. Hackney became aware of the proposed deal. Over the next three days he purchased 350 Charming Shoppers call option contracts with a strike price of $5.00 and an expiration date of May 19, 2012.

Following the deal announcement on May 2, 2012 the options were sold. Mr. Hackney realized profits of $44,750.

The Order alleges violations of Exchange Act Sections 10(b) and 14(e). To resolve the proceeding Mr. Hackney consented to the entry of a cease and desist order based on the Sections cited in the Order. He also agreed to the entry of an order denying him the privilege of appearing and practicing before the Commission as an accountant. He was barred from serving as an officer or director for a period of five years. Mr. Hackney will pay disgorgement of $48,050, prejudgment interest and a penalty equal to the amount of the disgorgement.

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by T. GormanPosted on Posted in SECActions

The SEC’s Office of Compliance Inspections and Examinations or OCIE announced its examination priorities for 2016. Those priorities generally “reflect certain practices and products that OCIE perceives to present potentially heightened risk to investors and/or the integrity of the U.S. Capital markets,” according to the release.

The examination priorities are built on the same three themes as last year. Those are: 1) Matters important to retail investors and saving for retirement; 2) market-wide risk issues; and 3) the use of data analysis to ascertain if there is illegal activity. Under each category OCIE identified a number of key exam areas which include:

1) Protecting retail investors and retirement savings:

· ReTIRE which includes examining the reasonable basis for recommendations, conflicts and supervision and compliance controls

· ETFs focusing on sales strategies, trading practices and disclosures

· Fee Selection and reverse churning

· Variable annuities, including an assessment of suitability and the adequacy of the disclosures, and

· Public pension advisers, focusing on pay-to-play and other key risk areas

2) Market wide risk, including an assessment of structural risks and trends that may involve multiple firms or entire industries:

· Cybersecurity

· Regulation systems compliance and procedures

· Liquidity controls, and

· Clearing agencies

3) Data analytics to identify potential illegal activity:

· Recidivist representatives and their employers

· Anti-money laundering

· Microcap fraud

· Excessive trading, and

· Product promotion

OCIE also has initiatives which include: Municipal advisors, private placements, never-before-examined investment advisers and investment companies, private fund advisers and transfer agents.

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