SEC v. Charles Raymond Langston III et al., Case No. 1:13-cv-24360 (S.D. Fla.) On December 3, 2013, the SEC announced the filing of a settled insider trading case against Charles Raymond Langston III. The SEC also charged his companies with illegal short selling. According to the SEC, Langston got confidential information in advance of a public announcement that lowered the value of AutoChina International’s stock. Placement agents approached Langston about investing in a secondary offering of AutoChina. After promising not to trade on the confidential information, Langston turned around and sold short 29,000 shares of AutoChina stock before the company announced completion of the secondary offering. To avoid getting caught, Langston traded through an entity he owned using a different broker and different account than he used when buying shares in AutoChina’s initial offering. Langston made $193,108. The SEC also alleges that Langston and two of his companies, Guarantee Reinsurance and CRL Management, violated Rule 105 of Regulation M, which prohibits the short sale of an equity security during a restricted period and the purchase of that same security through the offering. The SEC alleges that Langston through Guarantee Reinsurance and CRL Management made short sales in advance of separate secondary offerings by Wells Fargo, Mitsubishi UFJ Financial Group, and Alcoa and purchased shares in the same offerings. As a result, they made more than $1.3 million. Without admitting or denying the SEC’s allegations, Langston has agreed to settle the insider trading charges by paying disgorgement of $193,108, prejudgment interest of $22,204, and a civil monetary penalty of $193,108. Langston and his companies also agreed to be enjoined from violations of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Rule 105 of Regulation M of the Exchange Act.
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