U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 24015 / December 14, 2017
Securities and Exchange Commission v. Lanny Brown, et al., Civil Action No. 2:17-cv-04630 (U.S. District Court for the District of Arizona)
SEC Charges Former Employee and Friend with Insider Trading in Securities of International Rectifier Corporation
The Securities and Exchange Commission today announced insider trading charges against a former employee of a semiconductor company and his friend for trading on nonpublic information that the company would be acquired.
The SEC alleges that Lanny Brown learned that Infineon Technologies AG planned to acquire his then-employer, International Rectifier Corp. (IRC), before the deal was publicly announced. According to the SEC’s complaint, Brown tipped his friend, Sean Fox, about the deal and both of them then acquired IRC call options. The SEC further alleges that Brown and Fox concealed Brown’s involvement in the trading by depositing approximately $12,000 of their combined funds into Fox’s brokerage account, and then used this account to purchase the call options for both of them. The SEC also alleges that Fox closed out the option positions after the acquisition was publicly announced, and the two defendants made $369,720 in illicit profits. To further hide Brown’s role in the trading, Fox allegedly funneled Brown’s share of the trading profits by paying several of Brown’s personal expenses and by writing checks to Brown’s children and stepchildren. Brown and his wife then endorsed those checks and used the funds.
The SEC’s complaint, filed in federal court in the District of Arizona, charges Brown and Fox with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. A criminal action is also pending against both Brown and Fox in the District of Arizona for the same underlying conduct. In the SEC’s action, the defendants have consented to the entry of a final judgment that permanently enjoins them from future violations of the charged provisions of the federal securities laws. The final judgment in the SEC’s action also orders them to pay, on a joint and several basis, disgorgement of $369,720 plus prejudgment interest of $43,147.79, with a credit for the monetary amount they have agreed to pay in the parallel criminal case against them.
The settlements with the SEC are subject to court approval.
The SEC’s investigation was conducted by Yolanda Ochoa and supervised by Finola H. Manvelian of the Los Angeles office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
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