The SEC today charged a former IT manager at a Delaware law firm and a relative with insider trading on confidential information about impending mergers and acquisitions by the law firm’s clients.  Jeffery Temple allegedly accessed material nonpublic information while working at a Wilmington, DE-based law firm, then traded in advance of at least 22 M&A public announcements involving 20 companies that retained his former employer as counsel in some capacity. 

Temple allegedly tipped his brother-in-law, Benedict Pastro, who traded in concert with Temple in advance of 12 public announcements.  The pair reaped over $182,000 in illegal profits, starting in 2009.  Temple was terminated from his job on 10/11/10, once law enforcement authorities revealed that they had uncovered his illegal scheme.

    SEC Allegations.   The scheme began in 2009.  Temple corresponded with his online brokerage firm using his law firm e-mail address.  Electronic login records for Temple’s brokerage account reflect that he often placed trades from work.  Frequent telephone calls around the time of the trades indicate that Temple closely coordinated his trading with in-law Pastro. 

DynCorp. Int'l Deal.   Temple and Pastro trading on the impending acquisition of DynCorp Int'l by Cerberus Capital Management L.P.  Temple’s law firm was hired 10/6/09 to act as special Delaware outside counsel to Dyncorp’s Board of Directors.  The pair purchased stock and call options in DynCorp shortly before the 4/12/10 public announcement.  Immediately following the announcement, they sold their positions for $34K in profits.

Facet Biotech Deal.  Temple and Pastro traded on an impending tender offer by Abbott Laboratories for Facet Biotech Corp.  Temple’s law firm was retained as counsel to Facet on or before 8/25/09.  The pair bought stock and call options only days before the 3/9/10 public announcement.  All positions were sold for $23K in profits.

Temple allegedly profited from his scheme as recently as September.

The SEC’s investigation is continuing.   [SEC Release 10-240, 12/7]