Director Allegedly Made Inside Trades During Merger Meeting

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By Cameron Finch

Oct. 21 — Pinnacle Financial Partners Inc. director James C. Cope is facing civil and criminal charges he traded on inside information obtained at a board meeting while the meeting was still under way ( United States v. Cope, M.D. Tenn., 10/21/16 ; SEC v. Cope, M.D. Tenn., 10/21/16 ).

Cope, a partner at a Murfreesboro, Tenn., law firm, bought Avenue Financial Holdings Inc. stock during a meeting that discussed the bank holding company's possible merger with Pinnacle, the Justice Department and the Securities and Exchange Commission said.

Insider Trading

As a board member, Cope was required to sign yearly certifications stating that he would comply with Pinnacle's insider trading policy, the complaints said. In addition, only two months before the trading occurred, Cope attended a special training on Pinnacle's insider trading policy, the complaints said.

Nevertheless, in the hour after the meeting ended, Cope placed four more orders, buying over 6,000 AVNU shares on the day of the executive committee merger meeting. Five days later, Cope bought several thousand additional shares of AVNU stock.

When the merger was announced, Cope earned approximately $56,000 in allegedly unlawful profits—a 40 percent return.

Cope faces up to 20 years in prison and hefty monetary penalties if convicted in the criminal case. The commission is seeking permanent injunctive relief, disgorgement and prejudgment interest, an officer and director bar and civil monetary penalties.

Cope, who graduated from Vanderbilt University Law School in 1974, specializes in civil litigation, corporate and governmental law, according to his law firm website. He has served as the city attorney in Smyrna, Tenn., and county attorney for Rutherford County. He also serves as general counsel for an electric cooperative and local airport and housing authorities.

Cope is represented by Aubrey Harwell of Neal & Harwell PLC, Nashville, who didn't immediately respond to a telephone request for comment.

To contact the reporter on this story: Cameron Finch in Washington at cfinch@bna.com.

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com.

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