New York Securities Lawyer Blog
On February 5, 2016, the Securities and Exchange Commission (“SEC”) filed a Complaint in the United States District Court for the District of Connecticut (the “Complaint”) charging Dennis Wayne Hamilton, the Vice President of Tax for Harman International Industries, Inc. (“Harman”), with insider trading in his own employer’s stock, in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Harman is headquartered in Stamford Connecticut, dealing in high quality audio systems for personal and professional use. Harman is listed on the New York Stock Exchange (symbol HAR). Dennis Wayne Hamilton, a resident of Norwalk, Connecticut, is a Certified Public Accountant in Colorado, and has been the Vice President of Tax for Harman since 2009, working closely with the Chief Executive Officer and the Chief Financial Officer to prepare the taxes and earnings announcements. According to the Complaint, Dennis Wayne Hamilton “also regularly attended meetings of Harman’s audit committee that were held after the close of each fiscal quarter. At these meetings, the audit committee received drafts of Harman’s not-yet-announced earnings releases and other nonpublic information.”
The Complaint alleges that towards the end of 2013, Dennis Wayne Hamilton used the unreleased quarterly earnings figures and announcement for the first quarter of 2014 to facilitate his purchase of 17,000 shares of Harman stock at $72.02 per share, for a total purchase price of over $1.2 million. Dennis Wayne Hamilton violated Harmon’s own internal policies by not only using nonpublic information, but also by failing to obtain permission from general counsel to trade in the company’s stock. He was able to generate a profit of $131,958.62 when the earnings report was made public the next day and the stock price subsequently rose by more than 12% to $81.02.
Sharon B. Binger, the Director of the SEC’s Philadelphia Regional Office, stated “[w]e allege that Hamilton traded on details known only to company insiders and took advantage of the stock market’s fair and level playing field.”
The Complaint requests that the Court permanently restrain and enjoin Dennis Wayne Hamilton from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, order him to “disgorge the unlawful trading profits derived from the activities set forth” in the Complaint, and order him to pay civil fines “up to three times the profits made pursuant to Section 21A of the Exchange Act.”
The United States Attorney’s Office for the District of Connecticut is also charging Dennis Wayne Hamilton criminally for his actions.
Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.