July 10, 2019/US SEC
The Securities and Exchange Commission today filed insider trading charges against an accountant and her friend, whom she illegally tipped with confidential information in advance of her company’s quarterly performance announcements in exchange for all-expense paid travel and other expensive gifts. The alleged insider trading scheme generated profits of more than $6.2 million and was uncovered by the SEC through analysis and technology that it uses to detect suspicious trading activity.
The SEC’s complaint, filed in federal court in Manhattan, alleges that Martha Patricia Bustos, formerly an accountant at Illumina Inc. and a certified public accountant, and her close friend Donald Blakstad engaged in a scheme to trade in advance of Illumina’s release of confidential revenue information. In exchange for extravagant gifts, Bustos allegedly tipped Blakstad in advance of four quarterly Illumina financial performance announcements from April 2016 to July 2018. Based on those tips of inside information, Blakstad allegedly purchased Illumina securities using accounts held by business associates and acquaintances to conceal his involvement. According to the SEC’s complaint, Blakstad personally realized approximately $4 million from the illicit trading and tipped at least four other friends and business associates who made $2.2 million in profits from Illumina trading.
“We used some of our latest advanced software to analyze trading data, as well as traditional investigative techniques, to piece together and expose the betrayal of trust alleged in our complaint. We allege that Bustos had an obligation to keep her company’s information confidential until announced to our markets, yet she repeatedly tipped Blakstad and allowed him to take advantage of her position in return for expensive travel and luxury merchandise,” said Kelly L. Gibson, Associate Director of the SEC’s Philadelphia Regional Office.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today filed criminal charges against Bustos and Blakstad.
The SEC’s complaint charges Bustos and Blakstad with knowingly or recklessly violating the antifraud provisions of the federal securities laws, and seeks permanent injunctions, disgorgement with prejudgment interest, and penalties.
The SEC’s continuing investigation is being conducted by Patricia A. Paw and Brian R. Higgins of the Philadelphia Regional Office and John S. Rymas of the Market Abuse Unit’s Analysis and Detection Center. The case is being supervised by Ms. Gibson and Brendan P. McGlynn. The litigation will be led by Christopher R. Kelly and supervised by Jennifer Chun Barry. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.