Federal securities regulators won an insider trading case when a jury in Boston ruled that a former Fidelity employee illegally profited from trading stocks that the mutual fund giant was buying for itself.
The jury in U.S. District Court in Boston found that David Donovan engaged in insider trading in Covad Communications Group Inc by giving his mother tips about nonpublic information about the company, the Securities and Exchange Commission said on Tuesday.
The SEC had charged that Donovan had obtained confidential information from Fidelity's internal order database which showed that the mutual fund giant was buying a big chunk of the San Jose, California-based technology company.
The case marks a major win for the SEC at a time the agency has been criticized for having failed to detect several Ponzi schemes. It also comes at a time the SEC is working on several other insider trading cases.
This verdict is a victory for investors and it demonstrates that we will continue to hold Wall Street insiders accountable for insider trading, said David Bergers, the SEC's regional director in Boston said.
(Reporting by Svea Herbst-Bayliss)