The leader of a $3 million stock-trading scheme has admitted to violating confidentiality agreements with investment banks and short-selling securities before offerings were publicly disclosed. Steven Fishoff, of California, pled guilty to one count of securities fraud and agreed to a $5 million fine. He is the fifth defendant to plead guilty in the three-year scheme, which netted the defendants more than $3 million in illegal profits.
Defendant Short-Sold Stock with Inside Information
Between May 2010 and August 2013, Fishoff and his co-defendants used inside information to short-sell the stock of public companies, in anticipation of a drop in the stocks’ prices when the stock offerings were disclosed to the public.
For each stock sale, Fishoff, along with one or more of the day traders he employed, entered into confidentiality agreements in which they agreed not to disclose or trade on inside information.
Fishoff, in breach of these confidentiality and trading restrictions, tipped off two of the co-defendants in the scheme with the inside information and they in turn executed trades using Fishoff’s capital. The profits were then split with Fishoff 50-50 as compensation for the information.
Steven Fishoff Will Forfeit More Than $1 Million
Steven Fishoff also has agreed to forfeit more than $1.6 million in assets to settle a parallel civil forfeiture action by the government. Sentencing is scheduled for June 20. He faces a maximum penalty of 20 years in prison. The other defendants await sentencing.
According to the indictment, Fishoff’s plea addressed short sales of 363,654 shares of Synergy Pharmaceuticals Inc. stock made in April and May of 2012. The government has dropped three other counts related to short sales of stock in Plug Power Inc., Ampio Pharmaceuticals Inc., and Solitario Exploration & Royalty Co.
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