The SEC now charges a former Federal Reserve employee with insider trading that lasted from October 2023 to January 2024.
The Securities and Exchange Commission (SEC) has initiated a lawsuit against Robert Brian Thompson.
The complaint, which was reviewed by FX News Group, was filed in the Virginia Eastern District Court on November 8, 2024.
The SEC alleges that from October 2023 to January 2024, Thompson, who was a senior banking supervisor and examiner at the Federal Reserve Bank of Richmond, engaged in illegal trading of stocks and options related to at least two banks under his supervision, using insider information.
As a senior official at one of the twelve regional Federal Reserve banks responsible for overseeing the U.S. banking system, Thompson had regular access to sensitive, nonpublic information about various publicly traded banks.
This included unreleased earnings data, capital and liquidity levels, risk assessments, and details from bank examinations and stress tests.
Due to his role, Federal Reserve policies mandated that Thompson keep all nonpublic information confidential and prohibited its use for personal gain.
Additionally, federal regulations barred him from trading in bank securities to avoid any conflicts of interest arising from his supervisory duties.
Despite these rules, during the specified period, Thompson allegedly used insider information obtained from his role at the Federal Reserve to trade stocks and options of two banks—New York Community Bancorp, Inc. (NYCB) and Capital One Financial Corporation.
To conceal his illegal trading, Thompson reportedly submitted false statements to the Federal Reserve, claiming he had no holdings in bank securities and had not engaged in any prohibited trading, despite knowing this was inaccurate.
The complaint states that Thompson executed his trades based on material nonpublic information about upcoming earnings announcements or disclosures he believed would positively impact the stock prices of those banks.
By making these trades, Thompson knowingly or recklessly disregarded the fact that he was acting on material, nonpublic information, violating his duties as a Federal Reserve employee.
Through these unlawful transactions, he reportedly made illicit profits of at least $584,873.
The SEC accuses Thompson of breaching Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The Commission is seeking a court order requiring Thompson to return all profits gained from these violations and to pay civil penalties as stipulated by the Exchange Act.
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Also Read: A Former Official Now Says The SEC Is “Done”
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