On September 21, 2021, the Securities and Exchange Commission announced that a final judgment was entered on September 16, 2021 against the final defendant in an enforcement matter involving five friends and colleagues who were charged with insider trading. The SEC charged Alabama real estate developer James Wallace Nall III with insider trading in 2019 for sharing material nonpublic information (MNPI) with his close friend and business partner, Michael Hale Smith, ahead of a 2016 merger announcement by Alabama-based potato chip manufacturer Golden Enterprises, Inc. Nall allegedly misappropriated the MNPI from his father, the director of Golden Enterprises, and while Nall did not place any trades himself, was accused of willfully sharing merger-related confidential information with Hale Smith, who then shared the tip with his father Michael Dwaine Smith, and boss Walter Vice Tutt. Michael Dwaine Smith also allegedly shared the tip with his son Robert Walter Smith.
In October 2019, Nall’s four co-defendants pleaded guilty to insider trading for unlawfully trading in Golden Enterprises securities based upon the MNPI received from Nall, and caused the team to realize approximately $437,000 in collective profits. In separate settlements with the SEC, the defendants were permanently enjoined from violating the antifraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and ordered to pay a collective total of $900,000 in disgorgement, prejudgment interest, and civil penalties.
Without admitting or denying the SEC’s allegations, Nall consented to the entry of a final judgment and was permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Nall was also prohibited from serving as an officer or director of a public company and ordered to pay a civil penalty of more than $220,000. The entry of Nall’s final judgment officially brings this SEC enforcement action to a close.
SEC Press Release | Final Judgment (Nall) | Answer to Complaint | Final Judgment (Hale Smith) | Final Judgment (Dwaine Smith) | Final Judgment (Vice Tutt) | Final Judgment (Walter Smith)