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December 6, 2012 12:01 am
US securities regulators have charged a Wells Fargo investment banker and nine others with insider trading, accusing the group of making more than $11m in profits by trading on confidential deal tips.
John Femenia, 30, was charged with using his position at Wells Fargo to obtain non-public information about at least four impending mergers involving the bank’s clients and tipping off his friends, according to a complaint filed in a US court for the Western District of North Carolina.
In exchange for the insider information, certain members of the group are alleged to have paid a portion of their illicit gains to Mr Femenia and other defendants.
The scheme is alleged to have begun as early as March 2010 and lasted through to July 2012, the Securities and Exchange Commission said. The last of the four deals in question involved a $3bn buyout of Shaw Group, a Louisiana-based energy services company, by CB&I, an engineering group.
A spokesperson for Wells Fargo said that Mr Femenia, who moved from the company’s Charlotte office to its New York division in May, was suspended immediately after the US bank learnt of the accusations on Tuesday. Mr Femenia could not be reached for comment.
The bank said it was fully co-operating with the investigation. “As the SEC noted in its complaint against Mr Femenia, Wells Fargo has detailed policies and training programmes on the handling of confidential information, and we have a zero-tolerance policy for the misuse of such information.”
The SEC said it had obtained a court order freezing the assets of the illegal traders.
US authorities have increased the number of new investigations into insider trading in recent years in what has amounted to the biggest crackdown of the practice since the 1980s.
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