The SEC sues former StoneX Financial executive Joseph Conlan to pay $159,389 for misusing inside information for Gain Capital stock transactions ahead of the acquisition.

gain capital

The Securities and Exchange Commission (SEC) announced a settlement with former financial services executive Joseph Conlan over alleged insider trading.

The charges relate to Conlan's trading in forex broker GAIN Capital (GCAP) shares after StoneX Financial was about to acquire all outstanding shares. Under the agreed-upon settlement, Conlan must pay $159,389 in profit restitution fees, pre-judgment interest, and civil penalties.

Conlan, former Global Head of FX Sales at INTL (well-known StoneX Financial), is under intense scrutiny. He learned from a former colleague that this institutional-grade financial service would process the GCAP acquisition. Conlan made a profit of $73,627.47 due to a 66% jump in GCAP's stock price upon the announcement of the acquisition on February 27, 2020.

This forex broker news of this misuse of information prompted the SEC Enforcement Division's Market Abuse Unit, led by Derek M. Schoenmann and Lindsay Moilanen, to investigate the case closely. The investigation charged Conlan with Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 concerning violations of antifraud provisions.

Without denying or admitting to the allegations, he agreed to a cease-and-desist order, banning work as an executive in a public agency for five years. Also, there was a disgorgement payment penalty of $73,627.47, a pre-judgment interest of $12,134.41, and a civil penalty of $73,627.47.

Even though the acquisition plan encountered a few obstacles, the company successfully acquired GAIN Capital for $236 million. The deal received 71% shareholder approval and was an all-cash deal at $6 per share. This step aims to add significant intellectual property.