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Two Charged With Insider Trading of Herbalife Stock

The SEC has charged two men with insider trading after they learned that hedge fund manager Bill Ackman was betting against the stock.
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The Securities and Exchange Commission charged two men Tuesday with insider trading in connection with Pershing Square's announcement that it had taken a short position on Herbalife. The SEC said Filip Szymik of New York learned from his roommate, who was a Pershing analyst, of William Ackman's planned announcement on Dec. 20, 2012, that he was shorting Herbalife stock because of his claim that its operations amounted to a pyramid scheme. Szymik, 28, then allegedly told Jordan Peixoto of the news. Peixoto, 30, of Toronto, in turn allegedly made $47,100 off of Herbalife put options, the agency said.

The SEC said it settled with Szymik, ordering him to cease and desist from further violations and pay a $47,100 civil penalty. Peixoto's attorney, Derrelle Janey, told CNBC that the charge "is another instance of the SEC going too far and penalizing someone for conduct that is not a violation of the law." The former Pershing analyst who leaked the news left the firm in September 2013, according to the SEC order against Szymik.