Aug. 2 (Bloomberg) -- The U.S. Securities and Exchange Commission sued a former Green Mountain Coffee Roasters 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 Waterbury, 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 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, the agency said in a complaint filed in federal court in Connecticut. Pugach’s mother was named as a relief defendant in the case because some trades were conducted in her account.
“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, said in the agency’s statement. “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.
“We are appalled at the alleged actions of this individual,” Green Mountain President and Chief Executive Officer Brian P. Kelley said in a statement. “All indications are that this case involves an irresponsible individual acting alone and we have no reason to believe anyone else associated with the company was involved.”
Michael English, an attorney for McGinnis at Finn Dixon & Herling LLP in Stamford, Connecticut, declined to comment. Alan Sobol, an attorney for Pugach at Pullman & Comley LLC in Hartford, Connecticut, said by telephone that he wanted to “review the pleadings before” before making a statement.
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