U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23854 / June 7, 2017
Securities and Exchange Commission v. Michael Trahan, No. 17-cv-731 (W.D. La. filed June 6, 2017)
SEC Charges Owner of Consulting Company in Louisiana With Insider Trading
The Securities and Exchange Commission today announced fraud charges against Michael Trahan for insider trading in the securities of The Shaw Group, Inc. (Shaw), a Louisiana-based energy construction company, ahead of a public announcement that Shaw was going to be acquired by Chicago Bridge & Iron Company N.V. (CBI).
The SEC’s complaint, filed in the U.S. District Court for the Western District of Louisiana, alleges that during July 2012, while Trahan was a consultant to Shaw, a Shaw employee told Trahan about the impending Shaw merger. The SEC also alleges that Trahan’s company, Petra Consultants, Inc., was bound by an agreement with Shaw that required Petra and Trahan to keep information received from Shaw confidential and not to use such information for any purpose except in the context of the consulting arrangement. The SEC further alleges that the same day the Shaw employee told Trahan about the impending merger, Trahan bought 5,600 shares of Shaw common stock. The SEC alleges that this purchase represented approximately 86% of the cash in Trahan’s account and approximately 73% of the total account value. The SEC further alleges that Trahan sold the stock shortly after the announcement of the acquisition for a profit of $69,735.
The SEC’s complaint charges Trahan with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Trahan has consented, without admitting or denying the allegations in the SEC’s complaint, to the entry of a final judgment imposing a permanent injunction and ordering Trahan to pay disgorgement of $69,735, pre-judgment interest of $10,957, and a civil penalty of $69,735. The settlement is subject to court approval.
The SEC’s continuing investigation is being conducted by Louis J. Gicale, Jr. and Ashley Dolan, with the assistance of Derek Bentsen, and is being supervised by Melissa A. Robertson.
The SEC appreciates the assistance of the Federal Bureau of Investigation, the U.S. Attorney’s Office for the Middle and Western Districts of Louisiana, the U.S. Secret Service, the Internal Revenue Service Criminal Investigation, the Options Regulatory Surveillance Authority, and the Financial Industry Regulatory Authority.