David Michael Gutman, a registered principal at New York, New York based JP Morgan Securities, and Christopher John Tyndall, a former broker at New York, New York based Meyers Associates, L.P., were named respondents in a FINRA complaint alleging that they engaged in a serial insider trading scheme that generated more than $9 million in profits by persons who traded in advance of the public announcements of corporate mergers and acquisitions. The complaint alleges that as an employee in his firm's "conflicts office," Mr. Gutman had access to and became aware of material, nonpublic confidential information concerning pending corporate merger or acquisition transactions. The complaint also alleges that Mr. Gutman provided Mr. Tyndall with the confidential, nonpublic information about each of the companies with which Mr. Gutman's firm was involved. Mr. Tyndall allegedly traded on the information and tipped customers and his parents, who also traded on the nonpublic information and tipped others to trade on the information. Mr. Tyndall's customers made profits of more than $1.7 million by trading in advance of news, and Tyndall earned commissions exceeding $870,000 for himself and his firm. Mr. Gutman, of Huntington, New York, and Mr. Tyndall, of Huntington Station, New York, signed documents acknowledging that acting on inside information was unlawful.
The complaint further alleges that FINRA sent JP Morgan Securities an inquiry letter in connection with suspicious trading ahead of the public announcement, providing a list of persons, including Mr. Tyndall, who traded in advance and requested that the firm ask personnel whether they knew any of the listed persons. Mr. Gutman falsely responded by telling his firm he did not know any of the listed individuals. However, during an on-the record interview, Mr. Tyndall testified about his relationship with Mr. Gutman. FINRA re-sent the inquiry letter to JP Morgan Securities, specifically asking the firm to show the list to Mr. Gutman. Mr. Gutman then admitted he knew Mr. Tyndall. In addition, the complaint alleges that Mr. Gutman and Mr. Tyndall made or caused to be made material misstatements or omitted material facts in connection with the purchase or sale of securities - particularly, the material, nonpublic information about the tipped securities.
Generally, illegal insider trading is the act of buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about a company. Insider trading violations may also include "tipping" such information, trading by the person tipped - the "tippee," and trading by those who misappropriate such information. Section 10(b) of the Securities and Exchange Act of 1934 makes it unlawful for any person to "use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe." To implement Section 10(b), the SEC adopted Rule 10b-5, which makes it unlawful to engage in fraud or misrepresentation in connection with the purchase or sale of a security.
Robert Wayne Pearce, a former SEC Enforcement Attorney, has litigated SEC actions for over 33 years, including, but not limited to, insider trading, stock market manipulation, and other alleged violations of the Federal securities laws. If you have been contacted by the SEC or believe that you may be subject of an investigation, call Mr. Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce defends companies and individuals who may be the subject of an SEC investigation or enforcement action regarding their alleged involvement in securities laws violations.
This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 33 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to representing investors and financial industry professionals throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.