The Financial Industry Regulatory Authority (FINRA) recently announced that a former registered representative, Michael Hendry, has been barred from the securities industry for engaging in insider trading and for failing to respond truthfully to questioning by investigators in FINRA’s Office of Fraud Detection and Market Intelligence (OFDMI). Hendry was also fined nearly $70,000, which represents the unlawful profits he received from the transactions.
Hendry, of Chicago, worked as a divisional vice president of Pacific Select Distributors, Inc. from November 2005 to September 2010. He was barred for buying shares of Boots & Coots, Inc. (WEL) while he was in possession of information, obtained from an insider at WEL, that another company was going to acquire WEL.
On February 25 and 26, and March 11 and 17, 2010, Hendry purchased 73,000 shares of WEL, paying between $1.73 and $2.16 per share. On April 9, 2010, the company announced that it had agreed to be acquired by Halliburton for $3 per share, at a total transaction value of approximately $204.4 million.
By April 12, 2010, the next trading day, WEL’s stock price increased $0.67, or 25 percent, to $2.95 per share. Following the announcement of WEL’s acquisition, Hendry sold all of his WEL shares for between $2.94 and $3 per share, realizing a profit of $69,955.
FINRA found that Hendry purchased shares of WEL while in possession of material, non-public information about the company’s pending acquisition. FINRA also found that Hendry violated FINRA Rule 8210, which requires an individual under investigation to testify truthfully under oath, when he provided untruthful statements to OFDMI investigators, namely, that he had purchased shares of WEL based on his own research of the company and that he did not know anyone currently or formerly employed at WEL.
In settling this matter, Hendry neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at https://www.whitesecuritieslaw.com.