On December 11, 2024, the Securities and Exchange Commission announced that it charged Ken Peterman, the former CEO of Comtech Telecommunications Corp., with insider trading for selling his Comtech shares ahead of the company’s publication of negative quarterly earnings results.
According to the SEC complaint, which was filed in the Eastern District of New York, Peterman attended a meeting on March 4, 2024, as part of the management team, in which he received MNPI regarding Comtech’s negative quarterly earnings results. Eight days later, on March 12, 2024, Peterman was informed by Comtech that he was terminated for cause, effective immediately. Within a few hours of his termination, Peterman allegedly placed an order to sell Comtech stock despite being subject to two different trading blackouts that survived his termination. On March 18, 2024, when Comtech publicly announced the negative quarterly earnings, its stock price dropped more than 25 percent, enabling Peterman to avoid approximately $12,500 in losses. According to the SEC, Peterman would have avoided an additional $110,000 in loses if a trading blackout had not prevented his financial advisor from selling additional Comtech stock that Peterson held in a joint account.
In its complaint, the SEC charged Peterman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking to permanently enjoin Peterson from committing further securities violations and requesting that he be permanently barred from serving as an officer or director of a registered company. The SEC is also requesting that the court order Peterson to pay disgorgement of his ill-gotten gains with prejudgment interest and a civil monetary penalty for the unlawful trades.
On December 11, 2024, the U.S. Attorney’s Office for the Eastern District of New York also unsealed an indictment charging Peterman with parallel criminal charges, including insider trading and securities fraud, in connection with the improper trades.
SEC Press Release | SEC Complaint | USAO EDNY Press Release | Unsealed Indictment