U.S. SECURITIES AND EXCHANGE COMMISSION|
Litigation Release No. 25948 / March 12, 2024
Securities and Exchange Commission v. Roy M. Cook, Jeffrey A. Natrop, Peter S. Renner, James Rudolph and Peter Williams, No. YY-civ-#### (E.D. Wis. filed Mar. 1, 2024)
SEC Charges Former Energy Company Official and Four Others with Insider Trading
The Securities and Exchange Commission today announced insider trading charges against Roy Cook, a former member of the Board of Directors of Tallgrass Energy LP(“Tallgrass”), and four of his friends for trading on material nonpublic information in advance of a corporate acquisition involving the Kansas-based energy company. The SEC also charged Cook for failing to file required disclosure reports concerning securities transactions by family trusts.
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Wisconsin, alleges that Cook, a resident of Hartland, Wisconsin, learned material nonpublic information about a potential acquisition offer for Tallgrass and tipped his friends, Jeffrey Natrop, Peter Renner, James Rudolph and Peter Williams, the information in advance of August and December 2019 public announcements concerning the offer. The complaint alleges that based on inside information from Cook, Natrop and Renner, co-owners of a Milwaukee, Wisconsin, architecture firm and friends and business associates of Cook’s, purchased Tallgrass call options on August 8 and 9, 2019. The complaint further alleges that Cook tipped Rudolph and Rudolph purchased Tallgrass stock on August 6, 2019. The complaint also alleges that Cook tipped Williams, his long-time friend and personal accountant, and that Williams purchased call options on August 19 and 21, 2019.
Following the August announcement, which saw Tallgrass shares increase by 36 percent, Cook served for several months as chair of a Tallgrass Conflicts Committee tasked with assessing the acquisition offer and negotiating the final terms of the transaction. In connection with this role, Cook allegedly learned material nonpublic information about the status of the negotiations that he communicated to Williams, who purchased Tallgrass stock in a Cook family trust account over which he had trading authority. The complaint further alleges that on December 10, 2019, Cook tipped Williams more material nonpublic information about the status of the negotiations, and Williams purchased more call options in his personal account.
Without admitting or denying the allegations in the complaint, each Defendant consented to a permanent injunction prohibiting them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act (“Exchange Act”) and Rule 10b-5 thereunder, with Cook also agreeing to an injunction under Section 16(a) of the Exchange Act. Cook has agreed to disgorge his illicit trading profits of $88,800, with prejudgment interest of $15,479, and pay a civil penalty of $801,742. Cook has also agreed to an officer-and-director bar. Each of the other Defendants has agreed to disgorge their illicit trading profits – $43,862 for Natrop, $13,520 for Renner, $31,035 for Rudolph, and $524,525 for Williams – along with prejudgment interest, and pay a civil penalty equal to their disgorgement.
The SEC’s investigation was conducted by David Frisof and Brian Vann, with assistance from Dean Conway, James Carlson and Brian Shute. The case was supervised by Brian Quinn. The SEC appreciates the assistance of the Financial Industry Regulatory Authority, the FBI, and the U.S. Attorney’s Office for the District of New Jersey.