SEC charges former Penn Interactive Ventures employee with insider trading
The SEC’s complaint, filed in federal district court in Philadelphia, alleged while employed at Penn Interactive, David Roda was given confidential information about Penn National’s interest in acquiring Canada-based theScore along with admonitions not to trade on that information.
In breach of his duties, Roda was found to have purchased 500 out-of-the-money call options on Score Media in the weeks and days leading up to the announcement of the acquisition, which was finalised in October last year after first being announced in August.
Roda also tipped his friend Andrew Larkin, who then purchased 375 Score Media shares. Larkin was also charged by the SEC in relation to this activity.
According to the SEC’s complaint, Score Media’s stock price increased nearly 80% after Penn National and Score Media publicly announced their deal, following which Roda and Larkin sold their holdings for profits of $560,762 (£460,873/€538,199) and $5,602, respectively.
The SEC complaint charged both Roda and Larkin with violating the antifraud provisions of the securities laws.
Roda agreed to be permanently enjoined from violating those provisions and also agreed to pay disgorgement, prejudgment interest and a civil penalty to be determined by the court at a later date.
Larkin neither admitted or denied the allegations but agreed to be permanently enjoined from violating the antifraud provisions of the securities laws and to pay more than $11,000 in disgorgement and penalties.
In addition, the US Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Roda.
“As we allege in our complaint, Roda was entrusted by his employer with critical, market-moving information, and he betrayed that trust by using the information to trade and also tip his friend so they could both profit,” co-acting regional director of the SEC’s Philadelphia Regional Office, Scott Thompson, said.
“When employees like Roda misappropriate and trade on confidential information, it erodes market confidence. The SEC remains committed to finding, investigating, and charging those who engage in insider trading.”