What You Have to Know
- An advisor allegedly used inside info from a buddy who labored at a publicly traded firm to revenue from an upcoming acquisition.
- The Division of Justice and SEC charged the advisor with securities fraud in separate actions.
- The SEC additionally named the advisor’s buddy as a defendant in its motion.
A registered advisor and dealer was charged on Tuesday with securities fraud by each the Division of Justice and Securities and Change Fee in U.S. District Courtroom for the Northern District of California in Oakland for allegedly buying and selling on nonpublic info.
The Division of Justice mentioned it has charged John Mendes, 39, previously of Oakland and now a Philadelphia resident, with securities fraud. If convicted, he faces a most sentence of 20 years in jail and a effective of $5 million. If convicted, he may even be required to pay restitution.
Mendes had been serving as an advisor or dealer for Impartial Monetary Group however the broker-dealer mentioned Wednesday he was “now not affiliated” with the agency.
Mendes has been a registered dealer since 2008, when he joined MassMutual, in keeping with his report on the Monetary Trade Regulatory Authority’s BrokerCheck web site. He left that agency in 2010 to affix Princor Monetary Providers, which he left in 2012. Mendes joined Impartial Monetary Group one yr later and continues to be working with the agency, in keeping with BrokerCheck.
Mendes and the agency didn’t instantly reply to requests for touch upon Wednesday.
In the felony motion by DOJ, Mendes was charged in a federal info that acknowledged he discovered nonpublic info from his buddy, recognized within the info solely as “Insider One.” (The buddy, nevertheless, was recognized within the parallel SEC motion as Andre Dabbaghian.)
On the time, the buddy labored for Granite Building, a publicly traded development supplies firm centered on massive private and non-private infrastructure initiatives, headquartered in Watsonville, California, in keeping with DOJ.
In 2018, Granite acquired Layne Christensen Co., a water administration, development and drilling firm that was based mostly on the time in The Woodlands, Texas, and was publicly traded till the acquisition, DOJ famous. Granite publicly introduced an settlement to purchase Layne on Feb. 14, 2018.
“Insider One actively labored on the acquisition and discovered materials personal info concerning the deal previous to any public disclosure of the potential acquisition,” in keeping with DOJ.
“As a requirement of Insider One’s employment,” he obtained coaching in and “agreed to by sure by Granite’s insurance policies and procedures,” which prohibited insider buying and selling and improper disclosure of fabric nonpublic info, DOJ mentioned.