On February 20, 2020 the Securities and Exchange Commission filed a complaint in the District Court for the Southern District of New York alleging that Bradley Davis, a retired executive from the Nordson Corporation, an adhesives manufacturer based in Ohio, participated in insider trading of stocks and options contracts purchased in 2016 based on material non-public information. In 2016, Davis, a US citizen, was vice president of Nordson’s Asia Pacific Group in Shanghai, China when he allegedly used information obtained in confidential financial reports to trade in Nordson securities. The financial reports showed that Nordson’s largest business division was outperforming internal projections, and that orders and shipments had increased as well. Based on this knowledge, and before the statements were made public, Davis purchased over $1 million in securities with his personal savings and his entire 401(k). Shortly after the financials were published, Davis sold his securities. Nordson’s stock rose drastically, resulting in net profits of over $850,000 to Davis, nearly doubling the size of his savings accounts in less than one year.
Before making these investments, Davis received ethics training and was told personally by the company’s general counsel that he could not trade in Nordson securities if he knew any significant information about the company at the time of his trades. Davis was also in charge of translating Nordson’s insider trading policy into Chinese to make sure that his employees understood the policy. In addition, when Davis was questioned by the SEC about these trades in 2017, he provided misleading information to cover up the reason for his trades.
The SEC has charged Davis with violating Section 10(b) and Rule 10b-5 of the Securities and Exchange Act of 1934, and asked the court that Davis be prohibited from participating in securities trading, pay disgorgement of all unlawful profits, pay civil penalties pursuant to the Exchange Act Section 21(d)(3) and any additional relief that the court deems appropriate. Davis has not yet responded to the complaint.