Recently, the SEC charged an ex-board chairman, who bought shares in his company, prior to the company’s announcement that it intended on buying back said shares.
The SEC charged him with fraud, alleging that he purchased shares of his company stock prior to the announcement of the buy back, causing the company to overpay $36,000 to repurchase its own securities. He allegedly realized a $124,000 profit, and, apparently, according to the SEC’s allegations, did not file a proper Form 4 so as to avoid SEC detection. The SEC alleged that the former board chair’s broker had, actually, informed him that he needed to file such a form.
This case demonstrates the SEC’s increased vigilance of corporate directors and officers, and the SEC will continue activity at regulating their conduct.