Cayman Islands insider trading scheme investigated by SEC
The U.S. Securities and Exchange Commission has filed civil charges against two Texas businessmen accusing them of violating federal securities laws governing ownership and trading of securities by corporate insiders. They are said to have organized insider trading scheme involving Cayman Islands companies and trusts, and to have received US$550 million of undisclosed gains by trading stock in the public companies “through hidden entities located in foreign jurisdictions.”
According to the SEC statement, the businessmen created an elaborate sham system of trusts and subsidiary companies in the Cayman Islands and the Isle of Man, with the purpose to sell more than US$750 million worth of stock in four public companies for which they were corporate directors, and committed an insider trading violation having received an unlawful gain of more than US$31.7 million.
Deputy SEC enforcement chief, Lorin Reisner, said that the accused persons used “the complex web of foreign structures” to conceal hunderds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders.