April 17, 2024

Former private equity consultant settles with SEC to resolve insider trading charges

On April 15, 2024, the Securities and Exchange Commission announced that it obtained a final judgment against Gil Friedman, a former consultant for private equity firm Francisco Partners Management, LP, to resolve insider trading charges in connection with securities purchases made in advance of Francisco Partners’ agreement to acquire Verifone Systems, Inc., a payment systems company.

According to the SEC’s complaint, between 2008 and 2022, Friedman worked as a consultant for Francisco Partners and served as the Chief Financial Officer of companies owned in whole or in part by Francisco partners.  While serving as a consultant, Friedman allegedly learned, in 2018, of Francisco Partners’ plan to acquire Verifone.  According to the SEC, in violation of the non-disclosure agreement signed with Francisco Partners that required him to keep certain information confidential, Friedman allegedly shared the material nonpublic information (“MNPI”) regarding the acquisition with his close friend Kevin Van de Grift who Friedman purportedly knew to be an active “day trader.”  Van de Grift allegedly purchased 60,000 shares of Verifone stock worth approximately $1 million within a week of receiving the MNPI.  On April 9, 2018, after Francisco Partners announced the impending acquisition, Verifone’s stock price increased by more than 52 percent.  On the morning of the announcement, Van de Grift sold all of his Verifone shares and allegedly generated approximately $300,000 illegal profits.

The SEC’s complaint, which was filed in the US District Court for the Southern District of New York, charged Friedman and Van de Grift with violating the antifraud provisions of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder.  Without admitting or denying the allegations in the complaint, Friedman consented to the entry of final judgment against him, on April 5, 2024, and agreed to be permanently enjoined from future securities violations; was ordered to pay a civil penalty of $298,000; and consented to an officer or director bar for a period of five years.  Friedman was also suspended from appearing or practicing as an accountant before the SEC during an administrative proceeding held by the SEC on April 10, 2024.  According to the Order, Friedman can apply to the SEC for reinstatement after five years.

The SEC’s case against Van de Grift continues.

SEC Press Release | Final Judgment| SEC Order – Administrative Proceeding | SEC Complaint