Insider Trading Charges For Former Wells Fargo BankerBy robertslaw, In White Collar Crimes, 0 Comments
Thirty-year-old John Femenia has been charged with using confidential information obtained through his position at Wells Fargo Bank to give guidance to his friends on stock transactions that could have a big payout. Wells Fargo was tapped to provide financial backing in the mergers of several companies; Femenia allegedly disseminated this information to friends who then purchased stock in the acquiring company.
The insider trading scheme allegedly began with the merger of ATC Technology Corp and GENCO Distribution System Inc. Femenia learned of the proposed acquisition through his position at Wells Fargo sometime near the 2009 Christmas holiday.
In March of 2010, Femenia alerted a friend in New York to the upcoming merger. The news spread to at least five others who purchased stock in ATC based on the tip, according to the Securities and Exchange Commission (SEC). The merger was publicly announced in 2010; ATC’s stock value increased by almost 40 percent.
Most of those who acted on the insider tip when purchasing ATC stock opted to sell after the merger was announced; one person elected to exercise the call option.
The SEC identified at least three other merger transactions that were handled the same way by Femenia. The agency also alleges that at least one person who benefitted from the insider trading tips promised kickbacks to Femenia for the information.
Everyone involved is being charged with insider trading by the SEC. Femenia, now a resident of New York, is facing federal criminal charges here in North Carolina, where he lived when the white collar crimes were allegedly committed.
Source: Raleigh News Observer, “Wells Fargo banker charged with insider trading,” December 6, 2012