Friday, November 30, 2012
A Westport investment industry executive has agreed to pay $1.4 million to settle insider trading charges, the Securities and Exchange Commission (SEC) said today.
The SEC alleges that I Joseph Massoud, who founded investment advisory firm Compass Group Management on Post Road East, engaged in insider trading ahead of the sale of Patriot Capital Funding Group based on nonpublic information he learned at the helm of a firm involved in the bidding process.
It said Massoud, who has neither admitted nor denied the SEC’s claims, gained access to nonpublic information contained in an online “dataroom” where bidding companies could learn more about Patriot Capital’s financial condition.
For access to the data, Compass Group had to enter into a confidentiality agreement that prohibited its employees from buying Patriot Capital stock, the SEC said.
Nonetheless, Massoud purchased shares soon after Compass Group gained access to the confidential information, and he bought even more stock after he learned that Compass Group’s bid was what he described as “waaaaay off” compared to bids from other companies, the SEC said.
Patriot Capital’s share price more than doubled after a merger was publicly announced, and Massoud realized more than $676,000 in illegal profits, federal regulators said.
Massoud agreed to settle the SEC’s charges by paying more than $1.4 million and will be barred from working in the securities industry or serving as an officer or director of a public company, the SEC said.
The settlement is subject to court approval.
“With full knowledge of a confidentiality agreement that prohibited him from buying Patriot Capital stock, Massoud abused his access to nonpublic data for what turned out to be a short-term personal gain,” said John T. Dugan, Associate Director of the SEC’s Boston Regional Office.
“As a result of the SEC’s action, Massoud must pay back double what he made in the scheme and he can never work in the securities industry again.”
Compass Diversified Holdings issued a statement today saying Massoud has resigned as CEO and a director of the company and as managing member of Compass Group. He had been on a leave of absence since Feb. 17, 2011.
Posted 11/30/12 at 04:08 PM