August 14th, 2011
Econintersect: Donald Johnson, a former managing director of the NASDAQ Stock Market, was sentenced to 42 months in federal prison Friday (Aug. 17). Johnson had pleaded guilty in May of numerous counts of insider trading. He used his influential position to gain inside information about several companies in advance of public announcements and traded on that knowledge. He attempted to hide his trading activity by conducting the transactions in an account in his wife’s name. In violation of security law and NASDAQ rules, Johnson did not disclose the existence of the account. Follow up:
Follow up:From Securities Technology Monitor:
According to court documents, Johnson monitored the stock of companies traded on Nasdaq and offered Nasdaq-listed companies information and analyses concerning trading in their own stock.
According to the Justice Department, those companies routinely entrusted Johnson with material, non-public information about their company, including advance notice of announcements concerning earnings, regulatory approvals and personnel changes.
Johnson admitted that he repeatedly used this information to purchase or sell short stock in various Nasdaq-listed companies shortly before the information was made public. He would then generate substantial gains by reversing those positions soon after the announcement.
The companies involved were Pharmaceutical Product Development Inc.; United Therapeutics Corporation; Digene Corporation; Central Garden and Pet Co.; Idexx Laboratories Inc.; and Energy Conversion Devices, Inc. Johnson was ordered to forfeit $755,066 of gains in addition to serving the jail time.
Source: Securities Technology Monitor