By MICHAEL CALIA
A partner at a New York-based investor-relations firm settled charges that he acted on confidential information to make stock trades in companies whose press releases he helped prepare, federal regulators said Tuesday.
Kevin McGrath, an employee at Cameron Associates, agreed to pay more than $25,000 to settle the civil charges brought by the U.S. Securities and Exchange Commission, the commission said in a news release.
Under the settlement, Mr. McGrath is also barred from trading in the shares of any company for which he or his firm performed investor-relations work within a 12-month period, the SEC said. Additionally, his firm, current or future, is required to notify clients in writing of any intent to sell shares that were received as compensation, and must receive written authorization from the company to sell those shares.
Neither the operator extension nor the extension for Mr. McGrath at Cameron Associates were answered when a reporter attempted to seek comment Tuesday.
The SEC said Mr. McGrath avoided losses of $5,400 when he sold Misonix Inc.MSON +0.15% shares in May 2009 after he learned that the company would report disappointing quarterly results. In May 2011, Mr. McGrath bought 1,000 shares of Clean Diesel Technologies Inc. CDTI +0.41% stock after he found out the company received a $2 million order, and then sold his shares after the stock rose 95% when the news was announced—making $6,376 in profit, the SEC said.
“McGrath’s self-centered misconduct betrayed both his own firm and his firm’s clients whose confidential information he exploited for personal gain,” Sanjay Wadhwa, a senior associate director for the SEC’s New York regional office, said in a news release.
The settlement comes as government regulators crack down on shady trading in the stock of companies with low market capitalizations.
Last week, the SEC accused the chief executive of a penny stock company, CytoGenix, and a “serial con artist” of misleading investors in a supposed vaccine-development company by issuing fake news releases. Also last week, federal prosecutors charged seven people—including the former husband of “The Sopranos” star Jamie-Lynn Sigler—of running a multimillion-dollar “pump-and-dump” scheme.