This week, it was announced that the federal district court in Connecticut had entered a settlement against Katherine Hanratty of Watertown, Connecticut. The judgment settles allegations that the defendant was engaged in insider trading of a payment processing company based out of New Jersey. The SEC’s complaint alleges that the former CEO of Heartland Payment Systems, Robert O. Carr, provided his longtime girlfriend, Hanratty, with confidential information about a potential acquisition of his company by another.
Carr is accused of giving Hanratty $1 million to open a brokerage account and telling her to use the money to buy more than 11,000 shares of Heartland’s stock. This happened in the weeks leading up to the merger announcement. After the announcement was made, the company’s stock price rose significantly. Hanratty allegedly obtained advice as to when to sell the stock from Carr. Ultimately, Hanratty liquidated her entire position in one day and earned substantial profits.
Hanratty has consented to the entry of the final judgment without admitting or denying the allegations. She will pay $277,980 in disgorgement and prejudgment interest as well as $250,628 as a penalty. The SEC case against Carr is ongoing. Further details have been made available here.