What You Must Know
- An advisor allegedly used inside info from a pal 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 pal 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 Alternate Fee in U.S. District Court docket for the Northern District of California in Oakland for allegedly buying and selling on nonpublic info.
The Division of Justice stated 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 can even be required to pay restitution.
Mendes had been serving as an advisor or dealer for Unbiased Monetary Group however the broker-dealer stated Wednesday he was “now not affiliated” with the agency.
Mendes has been a registered dealer since 2008, when he joined MassMutual, in response to his report on the Monetary Business Regulatory Authority’s BrokerCheck web site. He left that agency in 2010 to affix Princor Monetary Providers, which he left in 2012. Mendes joined Unbiased Monetary Group one yr later and remains to be working with the agency, in response to BrokerCheck.
Mendes and the agency didn’t instantly reply to requests for touch upon Wednesday.
In the legal motion by DOJ, Mendes was charged in a federal info that acknowledged he discovered nonpublic info from his pal, recognized within the info solely as “Insider One.” (The pal, nevertheless, was recognized within the parallel SEC motion as Andre Dabbaghian.)
On the time, the pal labored for Granite Building, a publicly traded building supplies firm centered on massive private and non-private infrastructure tasks, headquartered in Watsonville, California, in response to DOJ.
In 2018, Granite acquired Layne Christensen Co., a water administration, building and drilling firm that was primarily based 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 private info concerning the deal previous to any public disclosure of the potential acquisition,” in response to DOJ.
“As a requirement of Insider One’s employment,” he acquired coaching in and “agreed to by certain by Granite’s insurance policies and procedures,” which prohibited insider buying and selling and improper disclosure of fabric nonpublic info, DOJ stated.