SEC CHARGES INVESTMENT ADVISER WITH BEING A "SERIAL INSIDER TRADER"

For investment advisers reading this blog or for those who are planning to sit for the Series 66 Exam to become registered I.A. representatives, here is an interesting release from the SEC about Insider Trading by an investment adviser whom the SEC calls a "serial insider trader."

SEC Charges Florida Investment Adviser a Second Time for Insider Trading

Wellington resident agrees to pay a penalty equal to three times his unlawful profits to settle charges

FOR IMMEDIATE RELEASE
2023-145

Washington D.C., Aug. 2, 2023 —

The Securities and Exchange Commission today filed insider trading charges against Charles Rustin Holzer, a family office executive and former broker who last year settled SEC charges that he traded in options of Dun & Bradstreet Corp. (DNB) on inside information. The SEC’s latest complaint alleges that, in addition to the options trades that were the subject of the SEC’s prior lawsuit, Holzer also placed unlawful trades in DNB stock through offshore accounts that were not disclosed to the SEC in connection with the prior investigation and settlement.

According to the SEC’s complaint filed today, nine days before an August 8, 2018, acquisition announcement, Holzer, of Wellington, Florida, learned material nonpublic information about the prospective DNB acquisition from an investment adviser pursuant to a non-disclosure agreement that prohibited him from disclosing or trading on the information. The SEC alleges that Holzer used that information to purchase 23,000 shares of DNB stock in offshore accounts belonging to two Cayman Islands-based entities that Holzer directly or indirectly controlled, Maglione International Ltd. and Frontenac Investments Ltd., resulting in $391,308 in ill-gotten profits. Although those trades took place at roughly the same time as the options trades at issue in the prior lawsuit, according to the SEC’s complaint, Holzer did not disclose the offshore trading to the SEC.

“We allege that Mr. Holzer is a serial insider trader whose conduct merits the stiffest penalties available to the Commission,” said Gurbir S. Grewal, Director of the SEC’s of the Division of Enforcement. “In this case, a fine equal to three times his illicit trading profits sends a strong deterrent message not just to Mr. Holzer, but also to others who may contemplate engaging in such conduct.”

The Series 66 Exam covers Insider Trading, and NASAA's recently revised Series 66 Test Specifications lists Insider Trading under Section IV (H) (4) (4.4), so expect questions on  Insider Trading on your Series 66 Exam.

Bob Eder in his Study for the Series 66 Exam discusses  Insider Trading in detail in Chapter 16, Ethical Practices/Fiduciary Obligations.

Here is the link to NASAA's Test Specifications for the Series 66 Exam. 

Study for the Series 66 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's Series 66 book on Amazon.

For questions about Bob Eder's Series 66 Manual, Study for the Series 66 Exam, or questions in general about the Series 66 Exam, or about Insider Trading, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. See Bob Eder's Author Page on Amazon.com.