Facts

The Securities and Exchange Commission filed a complaint against John Gray, Christian Keller, Kyle Martin, Aaron Shepard, for alleged securities law violations.

PLAINTIFF'S CONTENTIONS:
The SEC alleged that Gray and Keller led an insider trading scheme and secretly traded profitably using confidential information gained from Keller's employers. They used a brokerage account that was held by Martin, who also participated in the scheme, to keep their respective employers from finding out about it. The two used disposable cell phones to discuss trades and avoid detection. Gray tipped Shepard, who then traded using the confidential information. In sum, the parties earned $743,000 in ill-gained profits.

DEFENDANTS' CONTENTIONS:
Defendants neither admitted nor denied the SEC's allegations.

Result

The parties reached a settlement that provided both injunctive and monetary relief. Defendants all agreed to be enjoined from further violating the securities laws. Gray agreed to pay $287,488 in disgorgement, $21,837 in interest, and $448,876 in civil penalties, for a total of $758,200. Keller agreed to disgorge $52,000 in ill-gained profits and pay $4,002 in interest and $417,469 in civil penalties. Martin agreed to pay $243,276 in disgorgement and $21,404 in interest. Shepard agreed to pay $161,388 in disgorgement and $9,633 in interest for a total liability of $171,021. Combined, defendants are liable for more than $1.6 million.