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SEC wins jury trial against broker tipped by KPMG partner

On 14 August 2019, jurors in Atlanta federal court returned a verdict finding New Jersey securities broker Raymond J. Pirrello, Jr. liable for insider trading in advance of three merger and acquisition transactions.

The SEC's evidence at trial showed that Pirrello received highly confidential non-public information about the impending acquisitions of Radiant Systems Inc., Midas Incorporated Inc., and BrightPoint Inc. from Thomas W. Avent, Jr., who performed tax work on each transaction as a partner at KPMG. Pirrello, in turn, tipped his former colleague and long-time friend Lawrence J. Penna, Jr., who traded in the securities of each of the three companies. According to evidence presented during the trial, Penna and his family made at least $107,922 in illicit trading profits, and shared at least $21,500 of these profits with Pirrello.

The jury found Pirrello liable on all counts, finding that he violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934, and Rules 10b-5 and 14e-3 thereunder. Avent and Penna each previously settled insider trading charges brought against them.

"This case involved a sophisticated scheme by industry professionals to use inside information on multiple occasions to obtain substantial illegal profits." said Joel R. Levin, Director of the SEC's Chicago Regional Office. "Insider trading undermines investor confidence in the integrity of the markets and those who engage in it must be held accountable."

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