This week, the Securities and Exchange Commission announced that it had charged three members of a family and a family friend with insider trading based on confidential information. The SEC has accused Damon Hovannisian of learning about the impending decision by Infineon Technologies AG to acquire the California-based International Rectifier Corp. (IRC) from his wife, who worked with IRC.
Then, the SEC alleges that Damon Hovannisian took the information to a friend and asked him to purchase IRC stock for him. Two days after the acquisition was announced, Hovannisian is accused of ordering his friend to sell his shares in IRC. Simultaneously, the SEC believes that Mr. Hovannisian passed along the information to his father, Vernon, brother, Vincent, and a family friend, Eddie Arakelian.
Each made trades based on the nonpublic information. The father, Vernon Hovannisian, was accused of buying IRC stock using a brokerage account, which had not been used in more than ten years. Then, Vernon allegedly sold the stock hours after the announcement went public. The brother, Vincent Hovannisian, is accused of buying IRC stock while on the phone with his brother. He disposed of his IRC shares a few days after the announcement was made.
The family friend, Eddie Arakelian, supposedly learned about the upcoming acquisition from Damon when the pair spent the day at Eddie’s horse form. He purchased the stock the following day. The SEC alleges that the four defendants brought in roughly $155,000 in illicit profits utilizing the insider information.
All defendants have agreed to entry of final judgments, without admitting to or denying their guilt. The final judgment prohibits the defendants from future violations. Each will also be required to pay disgorgement and civil penalties for their actions. The settlements will need a court’s approval before going to effect.