On August 5, 2024, a final judgment was issued to resolve insider trading charges against Florida resident Charles Baugh. On July 30, 2024, the Securities and Exchange Commission announced that Baugh had been charged in connection with the purchase of ADT, Inc. securities in advance of the company’s announcement of its agreement to partner with Google LLC to create the next generation of smart home security services. According to the SEC’s complaint, Baugh obtained material nonpublic information (“MNPI”) regarding the impending partnership from a family member who was a senior employee at ADT. Based on the MNPI, Baugh allegedly purchased ADT securities using five different online brokerage accounts, and also convinced another relative to purchase ADT securities. According to the SEC, these actions breached a duty of trust and confidence that Baugh owed to the family member. After the agreement was announced publicly, Baugh and the trading relative allegedly sold their securities and, in total, generated nearly $400,000 in unlawful profits.
The SEC’s complaint, which was filed in the US District Court for the Southern District of Florida, charged Baugh with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC’s allegations, Baugh settled with the SEC and consented to the entry of a final judgment against him. The final judgment permanently enjoins Baugh from engaging in further securities violations and orders him to pay more than $320,000 in disgorgement; approximately $50,000 in prejudgment interest; and a civil penalty of more than $473,000.