The family that trades on inside information together, stays together!
The SEC filed a settled insider trading complaint against Matthew Brunstrum and his mother, Susan Brunstrum, in a federal district court in Illinois. According to the SEC complaint, Matthew Brunstrum learned that his employer, Stericycle, was about to announce disappointing first quarter earnings. The complaint does not specify how Brunstrum learned this information, but did state that he worked in close proximity to Stericycle’s management and accounting teams.
The Commission alleged that Brunstrum engaged in improper trading based on this information, and avoided losses and earned profits in the amount of $159,904. He also allegedly tipped his mother, Susan Brunstrum. According to the SEC, his mother fared even better, walking away with a total of $170,252 in avoided losses and earned profits.
The Brunstrum case is a rather routine insider trading case, with the tipper and tippee selling the shares of the company they owned before the negative earnings announcement, and then buying and disposing of short-term out-of-the-money puts in a way that neither had traded before. What makes this case interesting, and blogworthy, is the evidentiary trail described by the SEC. The Brunstrums broke the second rule of insider trading—don’t talk about insider trading (the first rule of insider trading is, obviously, DON’T DO IT!).
Stericycle emailed a notice to all employees about the trading blackouts in advance of each quarterly close. After learning that the company would miss its first quarter numbers, Matthew Brunstrum engaged in the following text exchange with a friend after describing his plan:
Brunstrum and his mother gave the SEC more fodder in a mutually congratulatory text exchange after the transactions. The SEC claimed that Susan Brunstrum sent a text to Matthew saying, "Will call you this afternoon. Made money on calls and puts.” She then added, “you did too!” Matthew Brunstrum allegedly replied, “yes, I will call u on my way home today.”
The Enforcement Division seems to be sending a message by bringing the case, and by including the language of the texts in the complaint. That message appears to be a simple one. When Matthew Brunstrum texted “[w]hat I’m saying is the SEC doesn’t look at analysts, it’s only VPs and above,” he was very, very wrong.
The Brunstrums consented, without admitting or denying any wrongdoing, to the entry of an injunction prohibiting future fraud violations, and also agreed to disgorge their ill-gotten gains, along with prejudgment interest. The district court will set any amounts due as civil penalties, and must approve the settlement before it becomes final.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)