The Securities and Exchange Commission recently charged Steven Teixeira of New York, an employee of an international payment processing company, and his close friend, New Jersey resident Jordan Meadow, with insider trading. In the complaint that was filed on June 29, 2023 in the US District Court for the Southern District of New York, the SEC accused Teixeira of misappropriating material nonpublic information (“MNPI”) from his romantic partner’s laptop while they both worked from home during the COVID-19 pandemic in the apartment that they shared from late 2020 until approximately May 2022.
According to the SEC’s complaint, Teixeira’s romantic partner at the time was an executive assistant who worked for an unnamed NY-based investment bank, and, when the laptop was unattended, Teixeira misappropriated information on multiple occasions related to mergers and acquisitions involving the investment bank and its clients. Teixeira, accused of violating a duty of trust or confidence to his romantic partner by virtue of their relationship, also allegedly purchased call options of numerous securities based on this MNPI. The SEC further alleges that he shared the information with several of his friends, including Meadow who purchased securities of several companies based on information that he knew Teixeira had misappropriated. The SEC alleges that, in exchange for the MNPI, Meadow offered to provide Teixeira with items of value, such as Rolex watches. During the relevant time period, Meadow was also a registered representative at an unnamed New York-based registered broker dealer. According to the SEC, Meadow also recommended profitable trades to a colleague and to brokerage customers based on MNPI from Teixeira. Meadow allegedly generated millions of dollars in profits from the scheme as he and a fellow stockbroker made hundreds of thousands more in commissions from their customers who collectively realized approximately $5 million in profits. More specifically, the SEC alleges that Teixeira realized approximately $28,000 in illicit profits while Meadow generated more than $730,000.
The SEC charged Teixeira and Meadow with violating the antifraud provisions in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is also seeking the payment of disgorgement, prejudgment interest and civil monetary penalties as well as a permanent injunction prohibiting both defendants from serving as officers or directors of a public company.
On the same day, the US Attorney’s Office for the Southern District of New York filed parallel criminal charges against Meadow and Teixeira, which included multiple counts of securities fraud. The USAO also unsealed the charges against Teixeira who reportedly pleaded guilty pursuant to a cooperation agreement.