The U.S. Securities and Exchange Commission sued a former Green Mountain Coffee Roasters (GMCR) employee, claiming he repeatedly obtained quarterly earnings data and traded in advance of its public release.
Chad McGinnis, who worked as a systems administrator at Vermont-based Green Mountain, bought the company’s securities -- typically out-of-the-money options –- shortly before earnings announcements, the SEC said in a statement today. He also tipped Sergey Pugach, a longtime friend and business associate who was also accused of illegal trading, the SEC said.
The two men reaped $7 million in illegal profits by using the inside information from earnings announcements since 2010.
“McGinnis and Pugach exploited confidential company financial data to conduct their insider trading scheme to the detriment of Green Mountain Coffee and its shareholders,” Donald Hoerl, director of the SEC’s Denver office. “The timing of their trades was consistently and exceptionally successful, but their scheme ultimately was not.”
The SEC complaint was filed under seal on July 24, when the court granted a motion seeking a temporary restraining order and an asset freeze, the agency said. A hearing is set for Aug. 7.
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