SEC Charges Former Finance Department Employee with Insider Trading

November 23, 2020/US SEC

The Securities and Exchange Commission today announced settled charges against Pennsylvania resident Michael R. Sullivan for allegedly trading on material, nonpublic information that he obtained through his employment at Dick’s Sporting Goods, Inc.

The SEC’s complaint alleges that in August 2018, while employed in the Product Development Department at Dick’s, Sullivan purchased Dick’s put options after learning of non-public sales information that would later be included in the company’s quarterly public earnings announcement. As alleged, after Dick’s announced its quarterly earnings on August 29, 2018, its stock price declined more than 9%, and Sullivan sold his entire put option position for profits of $11,500. The complaint also alleges that in November 2019, after Sullivan moved to the Finance Department and became responsible for providing certain sales metrics for Dick’s earnings binder, he purchased call options in advance of the company’s quarterly earnings announcement. According to the complaint, Dick’s stock price increased more than 18% following the announcement, and Sullivan sold his call options for profits of more than $26,000.

The complaint, filed in the U.S. District Court for the Western District of Pennsylvania, charges Sullivan with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Sullivan consented to a final judgment permanently enjoining him from violating the charged provisions and ordering him to pay a civil penalty of $75,470. The settlement is subject to court approval.

The SEC’s investigation was conducted by Matt Reilly, with assistance from Brian Shute, and was supervised by Kevin Guerrero and Jennifer S. Leete.

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