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Former Wells Fargo trader Joseph Ruggieri beat back SEC allegations he traded health-care stocks based on tips from a stock analyst shortly before the analyst changed his analyst ratings ( In re Ruggieri, S.E.C., Admin. Proc. File No. 3-16178, 7/13/17 ).
An administrative law judge dismissed the proceedings and an evenly divided Securities and Exchange Commission allowed the ruling to stand.
According to Commissioner Michael Piwowar, the evidence didn’t establish that Ruggieri engaged in insider trading. He said that while telephone records were consistent with analyst Gregory Bolan tipping his colleague, “there also is contrary evidence.”The two men spoke almost every day during the year and a half they worked together at Wells Fargo, Piwowar said, and phone calls preceding a trade wouldn’t have been unusual. Moreover, on at least some occasions, contemporaneous email suggested that Ruggieri and Bolan discussed matters other than the ratings changes, Piwowar said.Commissioner Kara Stein said there was enough evidence to show that Ruggieri traded on inside information on at least one occasion. The Enforcement Division isn’t required to prove that he “engaged in insider trading on every possible occasion,” Stein said. Citing “the uncanny timing of Ruggieri’s profitable trades,” among other matters, she said the Enforcement Division met its burden. Stein and Piwowar, then acting chairman, were the agency’s only members after former Chairman Mary Jo White stepped down early this year. In May, former Sullivan & Cromwell attorney Jay Clayton was sworn in as White’s successor.
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