Dec. 31, 2020 By Christian Murray
The U.S. Securities and Exchange Commission has charged a Long Island City man with insider trading after he allegedly bought and sold stock in a chemical company after being tipped off that the corporation was likely to be acquired.
Jason Peltz, 37, of 48th Avenue, allegedly started buying stock and call-options in Ferro Corp., a chemical manufacturer, after learning from an insider that a prominent private equity firm was looking to acquire it.
Peltz also notified his friends and associates—including an unnamed Long Island City couple—about the potential windfall, according to court documents. Collectively, Peltz and his associates made a collective profit of approximately $1 million.
The SEC filed a civil complaint against Peltz in Brooklyn federal court on Dec. 22 seeking monetary penalties. The U.S. Attorney’s office filed criminal charges against him at the same time in a parallel action.
According to court documents, Peltz made a series of profitable trades that stemmed from inside information that he obtained from a “close friend.” The friend attended the Ferro board meeting on Feb. 17, 2016, where the potential acquisition was discussed.
Days after the board meeting, Peltz allegedly began trading on this information, according to the SEC complaint. Instead of using his own brokerage account to make the trades, he bought Ferro securities using an associate’s account. The trades were made online via an IP address in Long Island City registered to Peltz.
Peltz allegedly bought 60,000 shares of Ferro through his associate’s account on Feb. 22. He allegedly had numerous phone conversations with the unnamed associate and continued buying stock and options through March 15, 2016.
Peltz was also buying Ferro securities via a brokerage account owned by a British Virgin Islands company, which was operated by two British citizens. Peltz allegedly knew one of the operators.
According to the charges, Peltz bought more than 133,000 shares of Ferro stock on Feb. 26, 2016 via the British Virgin Islands account. The trades were made online via an IP address registered to Peltz in Long Island City, according to court documents.
Peltz also tipped off several people as to the private equity firm’s interest in Ferro—included an unnamed married couple from Long Island City—who bought stock in February.
On the evening of March 14, Peltz allegedly exchanged a number of phone calls with the Ferro insider and the insider’s wife. Peltz was allegedly good friends with the pair–even helping the couple organize a private jet when they got married on a Caribbean island.
The next morning, March 15, Peltz purchased 2,000 shares of Ferro using the British Virgin Islands account and placed calls to certain traders at around 9 a.m.
Moments late, Bloomberg News published an article disclosing that Apollo Global Management, a giant private equity firm, was looking to acquire Ferro. The stock price jumped.
According to the charges, 150,000 shares of Ferro stock were sold from the overseas account within a minute of the news report. Peltz’ Long Island City IP address was used to make the trades.
Ferro securities were also sold from Peltz’ associate’s account.
A series of wire transfers from the associate’s account to Peltz were made at the end of March, according to court documents. That account allegedly made $226,000 in illicit profits.
Meanwhile, transfers were made from the British Virgin Islands entity to the Ferro Insider, according to court documents. That account made at least $654,000 in illicit profits.
The unnamed Long Island City couple allegedly made $7,000 from their trades.