Caught red-handed
The US Securities and Exchange Commission (SEC) has charged a former employee of Penn Interactive Ventures with insider trading. It announced the charges on Monday against David Roda, a former software engineer for the Penn National Gaming subsidiary. The charges relate to Penn’s $2bn acquisition of Score Media and Gaming in August 2021.
Roda acquired confidential information
The SEC filed its complaint in a Philadelphia federal district court. It alleges that Roda acquired confidential information regarding Penn’s interest in purchasing Score Media. As it was confidential information, the 36-year-old was told that he could not conduct any financial trades relating to it.
However, he allegedly proceeded to buy 500 Score Media out-of-the-money call options for about $20,000 in the weeks and days leading up to the announcement of the acquisition. He also supposedly gave the insider info to his friend Andrew Larkin, who proceeded to buy 375 shares of Score Media. The SEC has also charged Larkin.
What are the charges?
Following the public announcement of the acquisition, the Score Media share price rose by almost 80%. Both Roda and Larkin then sold their positions, unlawfully profiting by $560,762 and $5,602, respectively.
violating antifraud provisions in US securities laws
The SEC has charged the two Philadelphia men with violating antifraud provisions in US securities laws. Roda has already agreed to pay prejudgement interest, disgorgement, and a civil penalty that the court will decide on at a later point in time. He has also agreed to the permanent enjoinment of violating any of the securities provisions.
Meanwhile, Larkin has to pay over $11,000 worth of penalties and disgorgement. He has neither denied nor admitted the accusations made against him. The court will need to approve the settlements.
A battle against insider trading
Other gambling-related insider trading cases have made the news in recent months. Federal authorities are currently looking into IAC chairman Barry Diller for suspicious options trades made in advance of Microsoft announcing its $68.7bn acquisition of video games publisher Activision. Diller is the biggest non-institutional MGM Resorts International shareholder.
Only last week, the Economic Crime Authority in Sweden announced an investigation into potential insider trading of LeoVegas shares before MGM Resorts announced a $607m takeover offer in May.