The US Securities and Exchange Commission (SEC) has levelled insider trading charges against a former Shaw Group executive and his brother-in-law. The allegations date back to 2012, when Shaw Group was acquired by Chicago Bridge & Iron (CB&I).
Jesse Roberts III, brother-in-law of Shaw’s former vice president of construction, Scott Zeringue, is alleged by the SEC to have made some US$ 920,000 through illicit and illegal trading practices. Mr Roberts is also alleged to have tipped two further unnamed individuals about the deal.
Mr Zeringue is said to have passed on information about the impending acquisition of Shaw Group by CB&I before the deal was made public. It was in this period that both Mr Zeringue and Mr Roberts are said to have bought shares and call option contracts in the company. When the acquisition was announced Shaw Group stock rose +55%, according to the SEC.
Mr Zeringue has already pled guilty to a separate set of charges for personally trading in Shaw Group shares. His settlement with the SEC has seen him plead guilty to criminal charges and pay fines of US$ 32,006 – his profit from the insider trading – plus a further US$ 64,012, for a total of US$ 96,018.
The new charges apply to both Mr Zeringue and Mr Roberts. SEC Enforcement Division associate director Stephen L Cohen said, “As charged in our complaint, Zeringue betrayed his duty to his company and its shareholders by tipping his brother-in-law with non-public information. Armed with this inside knowledge, Roberts loaded up on option contracts that he knew would earn him a huge but illegal profit.”
In addition to paying profits from the trades and associated, fines, insider trading violations carry a maximum prison term of 20 years.