The Securities and Exchange Commission today charged an investment banker who was primarily based in Charlotte, N.C., and nine others, including Roger A. Williams of Georgetown, involved in an insider trading ring that garnered more than $11 million in illicit profits trading on confidential information about impending mergers.
The SEC alleges that John W. Femenia misused his position at Wells Fargo Securities to obtain material, nonpublic information about four merger transactions involving firm clients.
Upon learning inside information about an impending deal, Femenia’s first call to set the insider trading ring in motion was typically to his longtime friend Shawn C. Hegedus, who worked as a registered broker. Femenia and Hegedus illegally tipped other friends who in turn tipped more friends or family members in a ring that spread across five states.
The SEC has obtained a court order freezing the assets of the illegal traders.
According to the SEC’s complaint, Femenia was based in Wells Fargo’s Charlotte office when most of the misconduct occurred, but worked in New York where he currently resides.
Femenia’s tippees included his friends Aaron M. Wens of Encinatas, Calif., and Matthew Musante of Miami. Musante tipped his father Anthony Musante of Melbourne, Fla. Hegedus tipped his girlfriend Danielle Laurenti and his business colleague Roger A. Williams, who lives in Georgetown. Williams tipped three of his friends: Frank M. Burgess, Jr. of Charlotte, James A. Hayes IV of Charlotte, and Kenneth M. Raby of Greer.
The SEC charged two companies with ties to Hegedus or Laurenti that were involved in the illegal trading: Coram Real Estate Holdings Inc. and GoldStar P.S. The SEC also charged two others as relief defendants for the purposes of recovering illicit profits that are now in their possession: Femenia’s girlfriend Kristine Lack and Anthony Musante’s wife Christine.
According to the SEC’s complaint, Femenia’s tips enabled profitable trades in the stock and options of the companies being acquired in the deals, and at least one trader provided a portion of his profits to Femenia in exchange for the information. Some tippees also kicked back a portion of their profits.
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