$5M Insider Trading Case Leads to Criminal Arrests

The US Securities and Exchange Commission has brought insider trading case charges against seven people who made millions of dollars while insider trading on dozens of upcoming acquisitions and mergers involving 30 corporate deals. The regulator’s complaint contends that Daniel Rivas, who used to be a bank IT employee, misused the access he had to a computer system by tipping four people with information that they then used to trade. Some of the those whom Rivas tipped allegedly also tipped other people, who tipped others, too.

InvestmentNews identified the bank that Rivas worked for at the time of the misconduct as Bank of America (BAC). (Bank of America Merrill Lynch later fired Rivas, who was then hired by RBC Capital Markets. In the wake of the insider trading allegations against him, Rivas was suspended by RBC.)

Rivas often tipped James Moodhe, who is the father of his girlfriend, using handwritten notes. Moodhe made approximately $2M from trading on the tips and shared the information with financial adviser Michael Siva, whom InvestmentNews identifies as a former Morgan Stanley (MS) broker.

Siva is accused of using insider information to make trades for his clients, earning commissions as a result. Bloomberg reports that Siva made over $880K in profits. He also allegedly made trades for himself and his wife and shared a number of tips with a client who then made trades based on the information.

Insider Trading Ring Widens

Two of Rivas’ friends, Roberto Rodriguez and Rodolfo Sablon, used the information he gave them to engage in insider trading through shell companies. Despite their lack of experience in trading, they made over $2M in profits through aggressive options trades even though their initial investment was just $100K. Rodriguez is accused of tipping a friend.

Meanwhile, Jhonatan Zoquier allegedly made $30K because of the inside information that was transmitted to him through an encrypted messaging application used by Roberto and Zablon. Zoquier is accused of sharing the confidential information with a man named Jeffrey Rogiers, who allegedly made illegal trades that netted him over $50K and also tipped others. Those whom Rogiers is accused of tipping are said to have made over $400K.

Now, the SEC is charging the seven men with fraud. The regulator wants the restoration of any ill-gotten gains in addition to interest plus penalties. The defendants are accused of making $5M.

Insider Trading Allegations Lead to Criminal Charges

In a parallel case brought by prosecutors in New York, criminal charges were brought against Siva, Rodriguez, Sablon, Zoquier, and Rogiers. Rivas and Moddhe already have pleaded guilty to conspiracy and fraud charges, as well as of making false statements to the FB.I.

According to the U.S. Attorney’s Office for the Southern District of New York, Rivas leaked information that was nonpublic and material regarding possible tender offers, acquisitions, and mergers that involved prospective clients and current bank clients. He tipped his co-conspirators over 50 times.

At the SSEK Partners Group, we are here to help investors recoup their losses caused by securities fraud. Contact our securities lawyers today.

The SEC Complaint in the Insider Trading Case (PDF)

Five Individuals Charged With Participating In Three Insider Trading Schemes Generating More Than $5 Million In Profits On Inside Information Misappropriated From An Investment Bank, Justice.gov, August 16, 2017