Former senior associate William Borchard, 28, who now lives in Chicago, Ill., allegedly told his friend and coworker William Raben on six different occasions about confidential corporate takeover plans before the news was released to the investing public, according to officials. Borchard reportedly learned of the takeovers through his position handling financial due diligence for clients interested in mergers or acquisitions.
A former auditor for the company, Raben, 30, who now lives in Louisville, Ky., allegedly made more than $20,000 in profits by using Borchard's information and trading before public announcements of the acquisitions were announced, SEC officials reported. Raben allegedly profited by buying stock before public announcements were made and then selling his shares, according to officials.
Information was passed between the two until the scheme was discovered in Oct. 2006 by PricewaterhouseCoopers' general counsel, at which point the SEC became involved.
The commission filed a complaint in federal court in San Francisco, and the men agreed to a settlement without admitting or denying their guilt, officials reported.
“Raben and Borchard violated PwC's rules on keeping client information strictly confidential and ignored their duties to their employer and its clients,” Marc Fagel of the SEC's regional office said.
Raben agreed to a permanent injunction from any further violations of antifraud provisions of the federal securities laws, and will pay back his profits and profits made by two other people that he had tipped off during the scam, altogether totaling almost $24,000. He will also pay a civil penalty of nearly $24,000, according to officials.
Borchard, a Certified Public Accountant, consented to a permanent injunction and a civil penalty of nearly $21,000, officials reported. He will be allowed to reapply as a practicing accountant before the commission after three years, officials reported.