Seven ‘inexperienced’ traders have been charged with criminal offences by US authorities after making millions in profits from insider trading.
The Securities and Exchange Commission (SEC) found confidential information on several imposing mergers and acquisitions was used between 2014 and this year for illicit trading activities.
Daniel Rivas, reportedly a former IT consultant from Bank of America, was at the centre of the alleged scheme. He was accused of using access to the bank’s computer to tip four individuals who then traded on the information.
Two of Riva’s friends - described by the SEC as ‘inexperienced traders’ - were also found to have discussed tips on a self-destructing smartphone messaging application.
The schemes were uncovered following the SEC’s data analysis tools to detect suspicious patterns across securities over time.
Steven Peikin, co-director of the SEC enforcement division, explained the tippers and trader in this case used various methods to cover their tracks, but their efforts failed.
The director of the SEC’s San Francisco regional office, Jina Choi, added: "We allege that this case involves repeated insider trading based on tips about dozens of confidential mergers and acquisitions stolen by an IT employee at a bank.
"IT employees are often entrusted with broad access to incredibly valuable, non-public information and have a duty to safeguard that information."