The U.S. Attorney’s Office for the Southern District of Florida recently announced that Charles Lawrence Baugh, Sr., a resident of Boca Raton, Florida, pleaded guilty to securities fraud for engaging in an insider trading scheme that generated net profits of more than $420,000. According to the USAO, $316,044 of the profits were Baugh’s personal gains – an amount that he agreed to forfeit as part of his guilty plea. Baugh is currently awaiting sentencing.
According to federal prosecutors, while attending a 4th of July gathering in 2020, Baugh learned from a family member about a pending partnership between Google LLC and ADT Inc. in which Google agreed to make a substantial investment in ADT. The family member held a senior position at ADT at the time, and Baugh allegedly knew that the information was material nonpublic information. In violation of a duty owed to his family member, he began purchasing ADT securities based on the MNPI on first trading day after the July 4th holiday, using his own accounts and those of at least two other family members. He also allegedly convinced two additional family members to purchase ADT securities based on the tip before the partnership was announced publicly. When the partnership was formally announced, ADT’s stock price increased by more than 50 percent. In his factual proffer, Baugh admitted that he sold his ADT securities after the announcement, enabling him to generate at total of $316,044 in personal profits. In addition, the two family members who purchased ADT securities at Baugh’s direction allegedly sold their ADT call options after the announcement and realized $74,180 and $32,199 in illegal profits.
In August of 2024, the Securities and Exchange Commission announced that it reached a settlement with Baugh to resolve civil charges related to the ADT securities trades. Under the terms of the settlement, Baugh agreed to be permanently enjoined from future securities violations and was ordered to pay disgorgement of $320,908, prejudgment interest of $50,405, and a civil penalty of $473,660.