SEC v. I. Joseph Massoud, Case No. 3:12-cv-01691 (D. Ct.). On November 30, 2012, the SEC announced insider trading charges against I. Joseph Massoud. The SEC alleges that Massoud traded ahead of the sale of Patriot Capital Funding based on nonpublic information. Massoud directed his investment advisory firm, Compass Group, to execute a confidentiality agreement with Patriot Capital so it could participate in the bidding process for Patriot Capital’s sale. After his firm was provided access to an “online dataroom” containing information about Patriot Capital as part of the bidding process, a Compass Group analyst accessed the dataroom and provided nonpublic information to Massoud. Massoud also obtained nonpublic information about Patriot Capital from others involved in the bidding process. Massoud then bought Patriot Capital stock which he sold for a profit after Patriot Capital publicly announced a merger. Without admitting or denying the charges, Massoud agreed to settle by consenting to a final judgment enjoining him from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Massoud will pay disgorgement of $676,013, prejudgment interest of $80,785, and a civil monetary penalty of $676,013. In addition, the final judgment will bar Massoud from serving as a public company officer or director and from being associated with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or national recognized statistical rating organization. Massoud will also be barred from participating in any penny stock offering.
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