Executive Barred from Public Companies for Insider Trading

Kimberly Watson, Editor in Chief
August 09, 2012 /

A federal judge has ordered to bar a former executive at Shuffle Master, Inc., from serving as an officer or a director of a public company for five years.

The bar order came after the US SEC has filed a complaint against R. Brooke Dunn and Nicholas P. Howey on November 19, 2009 for illegal insider trading in Shuffle Master stock and options before the announcement of disappointing financial results by Shuffle Master.

Judge James C. Mahan ordered that the bar be imposed from the date the complaint was filed.

The SEC alleged that, on February 26, 2007, after he first learned that Shuffle Master would announce disappointing preliminary financial results, Dunn called Howey and tipped him to Shuffle Master’s anticipated announcement. Howey then immediately sold all of his previously-purchased Shuffle Master stock and calls and purchased Shuffle Master puts.

The next day, after Shuffle Master announced its disappointing financial news, Howey sold all of the Shuffle Master puts he purchased the previous day, thereby profiting and avoiding losses.

Judge Mahan said: “Mr. Dunn abused his fiduciary position, and violated his employment agreement and the company’s code of conduct by sharing confidential information with Mr. Howey.” The Court further found that “Mr. Dunn was aware that sharing information with Mr. Howey was improper but chose to ignore company policy when he divulged confidential information.”

 

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