Fri. Jul 10th, 2020

Planet Compliance

Innovation & Regulation in Finance

FINRA bars investment firms VP and Broker Friend in Insider Trading Scheme

3 min read

The Financial Industry Regulatory Authority (FINRA) announced today that it has barred David Michael Gutman, a Vice President in the conflicts office of J.P. Morgan Securities, LLC, and Christopher John Tyndall, a former registered representative at Meyers Associates, L.P., from the securities industry for their roles in an insider trading scheme. Gutman and Tyndall were longtime close personal friends who grew up together on Long Island. FINRA’s investigation found that Gutman improperly shared material, non-public information with Tyndall during conversations that took place between March 2006 to October 2007 regarding at least 15 pending corporate merger and acquisition transactions. Tyndall then used the information to trade ahead of at least six of the corporate announcements using personal and family accounts over nearly a two-year period, and also recommended the stocks to his customers and friends. Also in connection with its investigation, FINRA barred a third broker, Joseph Critelli – also a friend of Tyndall and a registered representative at Westrock Advisors, Inc. at the time – in January 2013 for failing to appear for testimony related to his trading activity in this scheme.

Gutman learned about the pending merger transactions through his work in J.P. Morgan’s conflicts office, which reviews all investment banking transactions for potential conflicts of interest for the firm. The inside information that Gutman improperly shared with Tyndall included details surrounding the acquisitions of American Power Conversion Corporation announced on October 30, 2006, Genesis HealthCare Corporation announced on January 16, 2007, First Data Corporation announced on April 2, 2007, SLM Corporation (Sallie Mae) announced on April 13, 2007, Alliance Data Systems Corporation announced on May 17, 2007, and Cytyc Corporation, announced on May 20, 2007.

Cameron K. Funkhouser, Executive Vice President of FINRA’s Office of Fraud Detection and Market Intelligence, said, “David Gutman had the keys to the kingdom through his position at J.P. Morgan as a gatekeeper with special access to material, non-public information. Gutman secretly gave inside information to his longtime friend, Christopher Tyndall, who exploited it for personal gain and passed it on to others. This case demonstrates that attempts to conceal illicit activity may delay but will not deter FINRA from ultimately uncovering the truth.”

In concluding these settlements, Gutman and Tyndall neither admitted nor denied the charges. Gutman consented to the entry of FINRA’s findings that he violated NASD Rule 2110 in failing to comply with his obligation to observe high standards of commercial honor and just and equitable principles of trade. Tyndall consented to the entry of FINRA’s findings that he violated NASD Rules 2110 and 2120, and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder for his role in the scheme.

FINRA’s investigation was jointly conducted by the Office of Fraud Detection and Market Intelligence and the Department of Enforcement.

The FINRA statement and related documents can be found here.

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