Following an administrative proceeding held by the Securities Exchange Commission on May 3, 2024, the SEC settled insider trading charges against Steven Masterson, the President and CEO of privately-held East Texas Ranch Holdings, Inc.. According to facts provided in the SEC’s order, Masterson traded in the securities of Dover Motorsports, Inc. based on material nonpublic information (“MNPI”) received from an unnamed friend who served as a senior executive for Dover. Masterson’s friend allegedly shared information regarding Dover’s agreement to be acquired by Speedway Motorsports, LLC, in confidence. The information was allegedly disclosed to Masterson when the friend was seeking career advice while the two were vacationing together. Unbeknownst to the friend, Masterson allegedly breached a duty of trust and confidence owed to him and, based on the MNPI, purchased Dover stock shortly before the acquisition was publicly announced. Dover stock rose by almost 61 percent following the announcement, which allegedly enabled Masterson to generate approximately $50,000 in illegal profits when all of the securities were sold. According to the SEC, Masterson’s actions violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rule 10b-5 and 14e-3(a) thereunder.
According to the SEC’s Order, without admitting or denying the SEC’s findings, Masterson agreed to be enjoined from committing further securities violations. He also agreed to pay a civil money penalty of just over $50,000 and more than $3000 in prejudgment interest. As part of the settlement, the SEC also imposed an officer or director bar upon Masterson for a period of three years.