SEC Charges Texas Residents with Insider Trading

ADMINISTRATIVE PROCEEDING
File No. 3-20410

July 23, 2021 - The Securities and Exchange Commission today announced settled insider trading charges against Texas residents Alan L. Alexander and Tan V. Kha. According to the SEC's orders, Alexander improperly shared inside information, and Kha improperly traded on inside information, about an acquisition before it was publicly announced in June 2018. On the next trading day following the announcement of the acquisition, shares of the then- publicly-traded target company closed up 120% on exponentially larger-than-normal trading volume.

The order against Alexander finds that in May 2018, Alexander, who worked for the acquiring company, overheard a conversation between company executives about the proposed acquisition, including the name of a specific target company and a potential per-share acquisition price. The order further finds that Alexander tipped a relative and two coworkers about the proposed acquisition, and that the tippees then traded in the subject company's stock. According to the order, Alexander had signed an agreement in 2016 in which he acknowledged that he would occupy a position of trust and confidence through his employment and that he would not disclose to others confidential information about his employer.

The order against Kha finds that in May 2018, Kha was told by a coworker that he had overheard a conversation between company executives about a proposed acquisition by Kha's employer's parent company.  The order finds that Kha then purchased directly 2,780 shares of the company to be acquired and asked a family member to purchase 3,000 additional shares on his behalf. As stated in the order, Kha also shared the information with several relatives who then purchased 106,479 shares of the company to be acquired. According to the order, Kha sold his direct and indirect positions for $4,478 in profits, and his relatives made $77,911 in realized and unrealized profits on the shares of the acquired company.

The SEC's orders find that Alexander and Kha violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Alexander and Kha consented, on a neither admit nor deny basis, to the entry of separate cease-and-desist orders and to pay penalties of $9,105 and $86,867, respectively.

The SEC's investigation was conducted by Delane Olson and supervised by Kevin Guerrero and Jennifer S. Leete. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.