U.S. DoJ, SEC Wide Insider Group

On 16 August, DoJ, SEC charged group in wide-reach insider trading.

  • DoJ charged 5 persons, SEC 7, for insider trading before mergers, acquisitions.
  • Group generated millions in profit by trading on confidential M&A information.
  • Evasion by shell companies, codes, and encrypted, self-destructing messaging.
  • US Attorney, NY also unsealed criminal charges against same seven individuals.

Bank IT Employee Source

  • Daniel Rivas, a former IT employee of large bank was at the center of scheme.
  • Consultant in research, capital markets technology group, of investment bank.
  • Access to an internal, proprietary deal tracking system, that bank maintained.
  • Misused access to bank computer system to tip four individuals who traded on.
  • Rivas allegedly also tipped others, who also traded on it and passed along tips.
  • Profited on market-moving news on 30 impending corporate deals, in 2014-17.

Wide Range of Tippees

  • Tipped girlfriend's father James Moodhe, who used code and meetings to relay.
  • Moodhe was treasurer and assistant controller for global inter-dealer brokerage.
  • Moodhe passed tips to a friend Michael Siva, a financial advisor at broker firm.
  • Siva used information to do profitable trades, for clients of his brokerage firm.
  • Earned commissions, and passed many tips along to client who traded on them.
  • Siva also traded on behalf of himself and his wife based on 2 tips from Moodhe.
  • Other trade ring of two Rivas's friends, Roberto Rodriguez, and Rodolfo Sablon.
  • Discussed tips on encrypted, self-destructing message app, via shell companies.
  • In year they turned under $100k into $2mn profits by aggressive option trading.
  • Third trading ring involved Jhonatan Zoquier who also passed to Jeffrey Rogiers.

SEC Analysis Unit

  • Trading identified by the SEC market abuse unit, analysis and detection center.
  • Use data analysis to find suspicious pattern, e.g. improbably successful trading.
  • Enhanced detection abilities allowed staff to spot the unusual trading activities.

Guilty Pleas

  • DoJ announced unsealing of guilty pleas on Aug. 9, 2017, by Rivas and Moodhe.
  • Admitted their involvement in scheme, and were cooperating with government.