SEC files insider trading charges involving Post-it note eating.

Posted by on Mar 19, 2014 in Fraud, Securities Regulation | Comments(0)

OK, here’s a tip.  If you feel compelled to eat Post-it notes or napkins because you don’t want someone to know what you’re doing, your conduct is probably bad.  Apparently, the “middleman” in this insider trading scheme didn’t see anything wrong with consuming office supplies.  He sure didn’t see it as an indication of illegal activity.

The SEC charged two people, a law firm employee and a registered representative, with insider trading.  The law firm employee would allegedly disclose to the middleman the names of companies that he learned about from the firm’s files.  The middleman would then, allegedly, write the ticker symbol on a Post-it or a napkin, show it to the stockbroker, then chew up and/or swallow the piece of paper.  Ick.

The broker is then alleged to have concocted a paper trail showing the reasons for a recommendation to buy the tipped stock.  He also is alleged to have made this recommendation to a number of unsuspecting clients who just thought he was a good stock picker.  Wrong.

Oddly, the Post-it note eating middleman has not been charged.  Maybe eating Post-it notes was punishment enough.  I hope he used the small ones.

So the SEC figured out the little scheme, it claims.  FINRA got credit in the press release.  No word on whether they recovered any of the Post-it notes.

Print Friendly, PDF & Email

Comments are closed.