New Jersey stockbroker Raymond Pirrello was given the information by Thomas Avent Jr, a former tax partner in KPMG’s US practice, who performed tax due diligence work during 2011 and 2012 on the impending acquisitions of Radiant Systems, Midas Incorporated and BrightPoint.
Pirrello then passed on the information to a former colleague and long-time friend, Lawrence Penna, who bought stocks or call options of all three target companies before the acquisitions were made public. Evidence at Pirrello’s trial revealed that Penna and his family made at least $107,922 (£89,438) in illegal profits and shared $21,500 with Pirrello.
“This case involved a sophisticated scheme by industry professionals to use inside information on multiple occasions to obtain substantial illegal profits,” said Joel Levin, director of the Securities and Exchange Commission’s (SEC) Chicago regional office. “Insider trading undermines investor confidence in the integrity of the markets and those who engage in it must be held accountable.”
Penna settled SEC insider trading charges against him in 2016 while Avent finally agreed to settle with the regulator at the beginning of the month. Under Avent’s settlement, he was banned from working as an accountant or auditor in relation to any US listed company and was fined $125,000.