No Respondents
Litigation Release No. 25696 / April 18, 2023
Securities and Exchange Commission v. Blakstad, et al., Civil Action No. 1:19-cv-06387 (S.D.N.Y., filed July 10, 2019)
SEC Settles Multi-Tiered Insider Trading Case Against Convicted Fraudster, His Friend and Tippee, and a Former IIIumina Accountant
On April 11, 2023, the United States District Court for the Southern District of New York entered a final judgment against Donald G. Blakstad, a self-employed individual from San Diego. On November 21, 2022, the Court entered final judgments against Robert J. Maron, a personal friend of Blakstad, and Martha Patricia Bustos, a former accountant at Illumina, Inc. and close friend of Blakstad.
According to the SEC's amended complaint, Bustos tipped Blakstad material, nonpublic information concerning at least four different Illumina quarterly performance announcements. Blakstad enlisted two individuals to trade on his behalf ahead of two of the announcements, and also tipped Maron and at least three other individuals, each of whom traded in advance of at least one of the announcements. After receiving the tip, Maron purchased out-of-the-money, near-expiration Illumina put option contracts in an account owned by his friend Joubin Torkan, which generated $900,000 in unlawful profits for Maron and $113,833 for Torkan. Torkan previously settled the SEC's relief defendant claims against him, agreeing to disgorge $113,833 and to pay prejudgment interest of $8,606, which the Court approved on September 29, 2021.
Blakstad and Bustos were both charged criminally by the U.S. Attorney's Office for the Southern District of New York. On June 8, 2021, Blakstad was convicted at trial of: (1) conspiracy to commit securities fraud; (2) securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder; (3) conspiracy to commit wire fraud; (4) wire fraud; and (5) aiding and abetting. The Court sentenced Blakstad to 36 months of imprisonment; three years of supervised release; criminal forfeiture of $4,518,103; restitution of $669,000; and an assessment of $700.
Bustos pleaded guilty to (1) securities fraud; (2) conspiracy to commit securities fraud; and (3) conspiracy to commit wire fraud. The Court sentenced her to time served, two years of supervised release, criminal forfeiture of $12,000, a criminal fine of $20,000, and 250 hours of community service.
In the SEC action, both Blakstad and Bustos have consented to the entry of judgments enjoining them from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Blakstad was ordered to pay disgorgement of $3,639,784, plus prejudgment interest of $188,068. Bustos was ordered to pay disgorgement of $12,000. For each, the monetary judgments were deemed satisfied by the orders of forfeiture against them in the criminal matters.
Maron consented to the entry of a judgment permanently enjoining him from violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and ordering that he pay a civil penalty of $1,800,000.
Additionally, on April 17, 2023, the Commission entered an administrative order suspending Bustos from appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission's Rules of Practice based on her criminal conviction.
Blakstad also was charged and agreed to settle the securities fraud charges against him in Securities and Exchange Commission v. Blakstad, et al., Civil Action No. 1:20-cv-00163 (S.D.N.Y., filed January 8, 2020), as described in the litigation release for that case.
The litigation was led by Christopher R. Kelly and supervised by Gregory R. Bockin of the SEC's Philadelphia Regional Office. The SEC's investigation that led to this action was conducted by Patricia A Paw and Brian R. Higgins, and supervised by Brendan P. McGlynn and Scott A. Thompson, all of the Philadelphia Regional Office.