The Securities and Exchange Commission charged a South Pasadena, Calif.-based wealth-management company and its former fund manager with conducting a three-year-long insider-trading spree in shares of Dell (NASDAQ: DELL ) , NVIDIA (NASDAQ: NVDA ) , and Wind River Systems Friday.
According to the SEC, from 2008 to 2010, Whittier Trust Company fund manager Victor Dosti "generated profits and avoided losses for funds he managed at Whittier Trust by trading on confidential information that he obtained from Danny Kuo, a Whittier Trust fund manager who Dosti supervised."
The SEC alleges that Dosti used inside information from Kuo to trade into and out of Dell and NVIDIA stock ahead of quarterly earnings announcements, and also traded Wind River stock ahead of news that Intel (NASDAQ: INTC ) had agreed to buy it in 2009 -- reaping $475,000 in gains and "avoided losses" from the first scheme, and $247,000 from the second.
"Time and again, Dosti received what he knew was inside information from Kuo and traded on it to generate illicit gains for the funds he managed," said SEC New York Regional Office Senior Associate Director Sanjay Wadhwa.
As is usual in this kind of announcement, revelation of the SEC's charge against the defendant, and conclusion of the matter, were made simultaneously. In this case, Whittier Trust has agreed to:
- Disgorge profits of $724,052.
- Pay interest of $75,296 on the ill-gotten gains.
- Pay a penalty of $724,052, equal to the amount of the illicit profits.
Similarly, Dosti has agreed to:
- Disgorge profits of $77,900.00.
- Pay interest of $2,951.
- Pay a penalty of $77,900, equal to the amount of the illicit profits.
In neither case did the defendants either admit or deny wrongdoing.