The Securities and Exchange Commission announced fraud charges and an asset freeze this week against a trader at a Dallas-based investment advisory firm, Cushing MLP Asset Management, who improperly profited by placing his own trades before executing large block trades for firm clients that had strong potential to increase the stock’s price.
The SEC alleged that Daniel Bergin, a senior equity trader, secretly executed hundreds of trades through his wife’s ahead of large client orders. Bergin concealed his lucrative trading by failing to disclose his wife’s accounts to the firm and avoiding pre-clearance of his trades in those accounts.
“Bergin’s misconduct is particularly egregious because his firm depended on him to manage market exposure and risk for its investments. Instead, he pitted his clients’ financial interests against his own,” said David R. Woodcock, Director of the SEC’s Fort Worth Regional Office.
According to the SEC’s complaint, Bergin realized at least $1.7 million in profits in his wife’s accounts from 2011 to 2012 as a result of his illegal same-day or front-running trades. More than $520,000 of the $1.7 million represents profits from approximately 132 occasions in which Bergin placed his initial trades in his wife’s account ahead of clients’ trades.
According to the SEC’s complaint, more than $1.8 million was withdrawn since July 2012 from a trading account belonging to Bergin’s wife that was undisclosed to his firm. Most of the withdrawals were large transfers to her bank account. To read the full complaint, please click here.
About Red Oak Compliance Solutions
Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.