On August 30, 2021, the US Securities and Exchange Commission announced that it had charged Robert J. Maron, a luxury watch dealer from California, with insider trading for his alleged participation in a multi-tiered insider trading scheme that generated over $6.2 million in profits between 2016 and 2018. The SEC filed an amended complaint in the US District Court for the Southern District of New York alleging that Maron realized more than $1 million in illegal profits when he traded in securities associated with Illumina, Inc., a California-based biotechnology company, ahead of the company’s October 2016 financial performance announcement.
According to the amended complaint, former Illumina accountant Martha Patricia Bustos, who had access to material nonpublic information related to Illumina’s quarterly financial performance, tipped her close friend Donald Blakstad before at least four quarterly financial performance announcements, in exchange for lavish gifts from Blakstad. Blakstad, the owner and principal of an investment fund known as Midcontinental Petroleum Inc., then allegedly shared Bustos’s tips with Maron and at least three others who placed trades in advance of the four announcements. Based on the tip, Maron allegedly used an account owned by his friend, Joubin Torkan, to purchase Illumina securities that generated over $1 million in illegal profits. According to the amended complaint, Maron gave approximately $113,833 of his unlawful profits to Torkan and kept the balance for himself.
The SEC has charged Maron with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with securities trades. Torkan has also been named as a relief defendant in the SEC action.
In June of 2019, Bustos pleaded guilty to securities fraud, securities fraud conspiracy and wire fraud conspiracy and is cooperating with the FBI. Almost two years later on June, 28, 2021 in a parallel criminal proceeding filed in the US District Court for the Southern District of New York, Blakstad was convicted by a federal jury on all counts including securities fraud, wire fraud, securities fraud conspiracy and wire fraud conspiracy. Bustos and Blakstad are currently awaiting sentencing; however, Blakstad filed motions in August 2021 in the NY district court to challenge his conviction.