Damian Williams, United States Attorney General for the Southern District of New York, and Michael J. Driscoll, Assistant Director of the New York District Office of the Federal Bureau of Investigation (“FBI”), were found guilty today in a series of securities frauds in connection with DAVID STONE’s insider trading scheme. . STONE was arrested in May of this year and pleaded guilty this morning before US District Judge Mary Kay Vyskocil.
US Attorney Damian Williams said: “David Stone admitted in court today that he had illegally accessed pre-release stock purchases from an investment advisory service in order to beat the markets and make millions in trading profits for himself. Today’s defense reflects this Office’s commitment to ensuring the integrity and fairness of our markets. David Stone is now awaiting punishment for his crime and must also give up his illegal earnings and pay compensation.”
According to the allegations made in the information and statements made in the public trial:
From 2020 to at least March 2022, DAVID STONE leveraged market-moving stock recommendations from an investment advice service (“Advisor-1”) before these recommendations were made available to paying subscribers. An IT specialist, STONE, accessed Advisor-1’s computing system using his unauthorized login credentials, and his improperly obtained access, before information about Advisor-1’s recommendations was announced to Advisor-1’s paying subscribers. used to view.
Advisor-1’s stock recommendations typically, but not always, result in higher closing prices for the recommended stock compared to the previous day’s closing price. By trading on these recommendations before they were announced, STONE was able to generate significant profits that other market participants could not access. In fact, in all the brokerage accounts it trades, STONE has earned at least $3.5 million.
In addition to its own trading, STONE has given at least one person (“Tipee-1”) trading tips. Between or around January 2021 and March 2022, on or about 45 different days, STONE sent Tipee-1 emails providing stock names and/or ticker symbols to Advisor-1’s paying subscribers prior to stock recommendation announcements. . . A brokerage account associated with Tipee-1 traded before Advisor-1 recommendations in more than a dozen cases. As a result of this trade, Tipee-1 made a profit of approximately $2.7 million.
Before STONE gave clues to Tipee-1, he outlined the terms in which STONE would provide information to Tipee-1, including the steps they would take to conceal their plans. STONE acknowledged, among other things, that “what we do could be considered insider trading” and recommended Tipee-1 accordingly.[d]other operations besides what I told you,” he explains, “[i]f all your trades increased by 5x and you will never lose [sic] may attract the attention of trade regulators.”
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DAVID STONE, 37, of Nampa, Idaho, pleaded guilty to a securities fraud charge with a maximum sentence of 20 years.
The maximum possible sentence in this case is set by Congress and is here for informational purposes only, as any sentence for the accused will be determined by the judge. STONE is scheduled to be sentenced by Judge Vyskocil at 14:00 on 14 February 2023.
Mr. Williams praised the FBI’s outstanding work. Mr. Williams thanked the U.S. Securities and Exchange Commission, which filed a parallel lawsuit.
This case is being handled by the Office’s Securities and Commodity Fraud Task Force. Assistant US Attorneys Samuel P. Rothschild and Andrew Thomas are in charge of the prosecution.