SEC: Inside merger info passed from NC netted $11M

Published on NewsOK Modified: December 5, 2012 at 5:51 pm •  Published: December 5, 2012
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RALEIGH, N.C. (AP) — An investment banker at Wells Fargo Securities and his longtime friend passed along insider tips on pending company mergers to friends or family members in five states that generated more than $11 million in illicit trading profits, federal regulators said Wednesday.

The Securities and Exchange Commission said John W. Femenia misused his position to trade in information about four pending mergers involving the firm's clients before the deals were announced.

Femenia did not return a call seeking comment Wednesday. He was based in Wells Fargo's Charlotte office in 2010 and 2011 when the SEC said he passed along insider information on three mergers before moving to New York.

The commission said Femenia passed inside information about an impending deal to Shawn C. Hegedus, who worked as a registered broker. Femenia and Hegedus then tipped off other friends who in turn tipped more friends or family members in North Carolina, South Carolina, Florida, California and New York.

Femenia "basically started a phone tree of nonpublic information to enrich friends and others," said William Hicks, associate director for enforcement in the SEC's Atlanta office.