On July 23, 2021, the US Securities and Exchange Commission announced two settlements that were reached with Alan L. Alexander and Tan V. Kha, two coworkers from Texas charged with insider trading, to resolve allegations that Alexander improperly shared inside information with Kah regarding an impending business acquisition that enabled Kah to trade securities before the acquisition was announced publicly. After the acquisition was announced, the acquired company’s shares increased by 120 percent causing multiple parties, including Kah, to earn thousands in unlawful profits.
According to Alexander’s court order, Alexander worked for the acquiring company from 2016 to 2018 during which time he obtained material, non-public information about his employer. While attending an industry conference in May of 2018, Alexander overheard a phone call between the president of his company and other company executives discussing the possible acquisition of a specific company and its potential per-share acquisition price. When the call ended, the president confirmed that the company was interested in acquiring another company, but the deal had not been finalized. Alexander allegedly shared this material, non-public information with a relative and two coworkers, one of which was Kha. The relative and unnamed coworker allegedly purchased shares in the company to be acquired before the acquisition was made public, and realized profits of $3,455 and $5,650, respectively, after the acquisition was publicized.
According to Kha’s court order, Kha also worked for the acquiring company in May 2018 when he received a tip from Alexander about the proposed acquisition of another company. Based on the tip, Kha purchased securities in the company to be acquired and asked a family member to purchase additional shares on his behalf. He also shared the material non-public information with several of his relatives who collectively purchased over 100,000 shares in the company to be acquired. After the acquisition was announced publicly, Kha sold his direct and indirect positions for $4,478, while his relatives made $77,911 in realized and unrealized profits.
The SEC charged Alexander and Kha with violating section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In separate settlements, without admitting or denying the allegations against them, Alexander agreed to pay a $9,105 civil monetary penalty, and Kha agreed to pay a $86,867.
SEC Press Release | Cease and Desist Order – Alexander | Cease and Desist Order – Kha