Sebastian Pinto-Thomaz, a former credit ratings analyst at Standard & Poor’s, was convicted of securities fraud and conspiracy to commit securities fraud for participating in two schemes to trade on material, non-public information in connection with the acquisition of Valspar Corporation by Sherwin-Williams, in violation of 15 USC §§ 78j(b) and 78ff, and 17 CFR § 240.10b-5. According to the evidence presented at trial, in March 2016 Pinto-Thomas, who had certified his compliance with firm policies regarding insider trading and the safeguarding of confidential information, was assigned to work on a rating evaluation service for Sherwin Williams to assess the impact of the proposed acquisition; he shared the information with two friends, who used the material non-public information to purchase Valspar shares and resell them after the acquisition was announced. Later, when he was presented by the Financial Industry Regulatory Authority with a list of individuals who had traded in Valspar stock before the acquisition, Pinto-Thomas denied having a relationship with either of his friends.
At trial, Pinto-Thomaz blamed his mother for communicating the inside information . The jury unanimously found that it was Pinto-Thomaz who committed the insider trading. Pinto-Thomaz’ two friends, who profited by over $100,000 each from the sale, pleaded guilty, but have not yet been sentenced. Pinto-Thomaz will be sentenced in July.