SEC v. Chad C. McGinnis and Sergey Pugach, Case No. 3:13-cv-1047 AVC (D. Conn.). On August 2, 2013, the SEC announced insider trading charges against former Green Mountain Coffee Employee Chad McGinnis and his friend Sergey Pugach. According to the SEC, McGinnis bought Green Mountain Coffee out-of-the-money options before the company made earnings announcements. He also tipped Pugach, who then traded in his own and his mother’s accounts. McGinnis and Pugach made $7 million trading on inside information. The SEC charges were made public after the Court granted its motion for a temporary restraining order, asset freeze, and other emergency relief. The SEC alleges McGinnis had access to Green Mountain Coffee’s computer server where earnings announcements and other confidential information were stored. He also had access to other employees’ e-mail accounts. As a result, he had information about Green Mountain Coffee earnings announcements before they were public. The SEC further alleges that McGinnis and Pugach communicated around earnings announcements, calling and texting each other. The SEC charged them with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC seeks
injunctive relief, disgorgement and financial penalties.
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