Virgin Atlantic
- The Securities and Exchange Commission charged a New York-based banking consultant who allegedly listened to his then-fiancée's calls about 2016's Alaska Air acquisition of Virgin America, a deal she worked on as an investment banker.
- He allegedly bought options based on what he heard - and made more than $250,000 in less than a month.
- The SEC charged the accountant with insider trading.
A New York accountant has to pay more than $500,000 to the Securities and Exchange Commission to settle insider trading charges, the agency said on Monday.
Peter Cho, a 39-year-old who was engaged and is now married to an unnamed investment banker, allegedly eavesdropped on his then-fiancée's calls as she worked on Alaska Air's $2.6 billion acquisition of Virgin America in 2016. He allegedly used what he heard to buy options in Virgin stock over the evolution of the deal, betting the price would rise. Ultimately, he made more than $250,000 on his trades, according to the SEC settlement release.
Bank of America and UBS led the deal for Alaska, but the SEC's charge did not name either the investment banker's employer or Cho's accounting firm. Bank of America declined to comment.
Cho's fiancée spent long hours on the deal, working nights and weekends in the one-bedroom Manhattan apartment the couple shared, as well as on vacation, according to the SEC settlement. As the deal progressed, Cho allegedly used what he heard from her work to buy various call options for $4,124.49, eventually making $251,386.19 in profit. On multiple days, Cho's trading made up 100% of the daily trading volume in Virgin stock, the SEC said.
The SEC said that Cho, who at the time of his trading had been in a relationship with the banker for five years, "owed a duty of trust or confidence to his fiance... based on their relationship which included a history, pattern, and practice of sharing confidences."
The SEC said Cho did not discuss his trading with his partner, including the money he made. The SEC also highlighted that because Cho worked as a manager at an accounting firm, where he provided financial advisory services to bank clients, he was trained on insider trading and protection of confidential information.
In the settlement, Cho did not admit or deny the SEC's allegations, but he agreed to avoid violating the SEC's antifraud rules, to return the $251,386 in "illegal profits" plus with prejudgment interest, and to pay a one-time penalty of the same amount, for a total of $532,777.
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