On Wednesday, August 16, 2017, the Securities and Exchange Commission announced insider trading charges again seven individuals. The defendants are accused of making millions by trading on confidential information about dozens of acquisitions and mergers. The traders allegedly used shell companies, code words and an encrypted self-destruction messaging app to try and elude detection.
The SEC’s complaint details the alleged crimes. Daniel Rivas, who worked as an IT employee with a large bank, is accused of being the centerpiece of the operation. Rivas is accused of abusing his access to the bank’s computer system to gain information and subsequently tip off four individuals, who traded with the provided information.
The SEC complaint alleges that the traders used insider information linked to 30 impending corporate deals to make profitable trades from October 2014 to April 2017. The SEC has accused Rivas of tipping off his girlfriend’s father, James Moodhe, on several occasions. Moodhe is accused of trading on the information and using coded conversations and personal meetings to pass the information along to a friend, Michael Siva.
Siva, who worked as a financial advisor at a brokerage firm, allegedly used the information to make profitable trades for his firm’s clients. Siva earned commissions and allegedly passed tips to another client, who subsequently traded on them. Siva is also accused of using the information to trade for himself and his wife.
Rivas is allegedly connected to two Florida men, Roberto Rodriguez and Rodolfo Sablon, who used shell companies to make trades. Despite being inexperienced traders, the two men were able to turn less than $100,000 into $2 million in less than a year. Rodriguez is accused of passing several tips to another friend.
The SEC’s complaint alleges that another inexperienced trader, Jhonatan Zoquier, also used the insider information, which was received through an encrypted messaging application. Zoquier, who is based out of New Jersey, is accused of passing the information to Jeffrey Rogiers in Oakland, California. Rogiers allegedly used the information to make profitable trades and simultaneously sent it to friends and colleagues.
The activity was discovered by the SEC Market Abuse Unit’s Analysis and Detection Center. The center utilizes data analysis tools to identify suspicious patterns, including successful trading across various securities over a period of time. The SEC’s complaint was filed in the Southern District of New York. It charges Rivas, Rodriquez, Moodhe, Sablon, Siva, Zoquier, and Rogiers with fraud. The SEC will seek permanent injunctions and the return of the allegedly ill-gotten gains.
All defendants are innocent until proven guilty.