The Securities and Exchange Commission (SEC) recently filed a complaint in the U.S. District Court for the Eastern District of New York against Ken Peterman, Comtech Telecommunications Corp.’s former CEO, president, and chairman of the board of directors, for insider trading.
The complaint is in connection to non-public information about Comtech’s forthcoming negative quarterly earnings results.
The complaint alleges Peterman received confidential information detailing Comtech’s upcoming negative quarterly earnings results. He was fired eight days later and began the process of selling stock despite being subject to two trading blackouts. By doing so, he avoided $12,445 in losses that occurred when Comtech reported the negative quarterly earnings and stock prices fell by more than 25 percent.
“There is no gray area when it comes to trading on the basis of material non-public information in breach of one’s fiduciary duty,” Tejal Shah, SEC New York Regional Office associate director, said. “C-suite executives like the defendant, a CEO with decades of experience, know that it is illegal to use their company’s confidential information for their own financial gain.”
Peterman’s financial adviser could not complete the sale of additional Comtech stock held in a joint account. Otherwise, Peterman would have avoided an additional approximately $110,000 in losses.