FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
02/19/2015 03:20 PM EST
The Securities and Exchange Commission announced insider trading charges against a former Fortune 500 company executive and his brother-in-law whom he allegedly tipped with nonpublic information ahead of the company’s merger.
The SEC alleges that while serving as vice president of construction operations at Baton Rouge-based The Shaw Group, Scott Zeringue traded company securities based on confidential information he learned on the job about an impending acquisition by Chicago Bridge & Iron Company. In the weeks leading up to the public announcement of the merger, Zeringue purchased 125 shares of Shaw common stock and asked his brother-in-law Jesse Roberts III, a dentist who lives in Ruston, La., to also purchase Shaw stock on his behalf.
Zeringue, Roberts, and others subsequently tipped by Roberts allegedly made nearly $1 million in combined illicit profits after the merger announcement caused the price of Shaw stock to increase by more than 55 percent.
In a parallel action, the U.S. Attorney’s Office for the Middle District of Louisiana today announced criminal charges against Roberts. Zeringue previously pled guilty to criminal charges and has agreed to settle the SEC’s charges by paying disgorgement of his ill-gotten trading profit of $32,006 plus a penalty of $64,012. He will be prohibited from serving as an officer or director of a publicly-traded company for 10 years. The settlement is subject to court approval.
“As charged in our complaint, Zeringue betrayed his duty to his company and its shareholders by tipping his brother-in-law with nonpublic information,” said Stephen L. Cohen, Associate Director in the SEC’s Division of Enforcement. “Armed with this inside knowledge, Roberts loaded up on option contracts that he knew would earn him a huge but illegal profit.”
According to the SEC’s complaint filed in U.S. District Court for the Western District of Louisiana, the insider trading occurred in the summer of 2012. Roberts reaped more than $765,000 through his illicit trading of call option contracts, and others made more than $154,000 from trading based on his tips. Roberts rewarded Zeringue for the original tip by giving him $30,000 in cash in November 2013. The SEC’s complaint charges Zeringue and Roberts with violations of the antifraud provisions of the federal securities laws.
The SEC’s continuing investigation is being conducted by Louis J. Gicale Jr. and Roger Paszamant under the supervision of Melissa A. Robertson. The SEC’s litigation against Roberts will be led by Derek Bentsen. The SEC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana as well as the U.S. Secret Service, Internal Revenue Service Criminal Investigation, Options Regulatory Surveillance Authority, and Financial Industry Regulatory Authority.