April 3, 2024

SEC charges four minor league baseball players with insider trading

On March 26, 2024, the Securities and Exchange Commission announced that it filed insider trading charges against current minor league baseball player Grant Witherspoon and three former players, Jordan Qsar, Austin Bernard and Chase Lambert.  The defendants were charged in the U.S. District Court for the Southern District of California in connection with securities purchases that were made ahead of a 2021 public announcement regarding the acquisition of Del Taco Restaurants, Inc. by Jack in the Box Inc.

According to the SEC’s complaint, Qsar learned of the acquisition from a close friend who was a finance employee for Jack in the Box.  The friend, who has not been charged, allegedly shared material nonpublic information (“MNPI”) regarding the acquisition with Qsar in confidence, assuming that he would not trade on the information or share it with others.  However, after receiving the MNPI, Qsar allegedly misappropriated the information and breached a duty of trust and confidence owed to his friend by purchasing Del Taco call options.  Qsar also allegedly shared the MNPI with friends and former teammates Bernard, Witherspoon and Lambert, who purchased the same series of Del Taco call options that Qsar had purchased.  According to the SEC, all three friends were aware that the MNPI shared by Qsar had been divulged in confidence.  In December 2021, shortly after the acquisition was announced publicly, Del Taco stock rose by 66 percent, allegedly enabling all four defendants to generate illicit profits totaling approximately $189,000 after the call options were sold.

The SEC charged all four defendants with violating the antifraud provision of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  The SEC is seeking to permanently enjoin all defendants from committing further securities violations, and the payment of civil penalties and disgorgement with prejudgment interest.

SEC Press Release | SEC Complaint