Investor charged with using business reporter for insider trading
The federal government has charged the head of a financial firm with using insider information and a relationship with a business reporter to reap a profit.
Michael Katz of Chief Investment Officer writes, “According to a 10-count indictment, over the course of five years Peltz allegedly developed relationships with sources at publicly traded companies and profited from trading on insider information those sources provided. He also allegedly cultivated relationships with business journalists who would write articles based on his insider information, which moved the stocks involved.
“For example, one of Peltz’s unnamed co-conspirators was on the board of directors of chemicals company Ferro Corporation and tipped off Peltz about a bid to take over the company that hadn’t been made public. Peltz then allegedly bought shares in the company and did so through the accounts of unnamed co-conspirators to avoid detection. He then fed that information to a business reporter with whom he had fostered a relationship, who wrote about the takeover bid, which sent the company’s shares higher.”
Read more here. The indictment does not name the reporter, but says their identity was known to the grand jury and that they worked for a “financial news organization.” The grand jury says that the reporter was tipped off to potential deal negotiations by Peltz, who then sold his investments after the stories appeared and caused the stock prices to rise.