FINRA Bars Illinois Broker for Insider Trading
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today announced that a former registered representative, Michael Hendry, has been barred from the securities industry for engaging in insider trading and for failing to respond truthfully to questioning by investigators in FINRA's Office of Fraud Detection and Market Intelligence (OFDMI). Hendry was also fined nearly $70,000, which represents the unlawful profits he received from the transactions.
Hendry, of Chicago, worked as a divisional vice president of Pacific Select Distributors, Inc. from November 2005 to September 2010. He was barred for buying shares of Boots & Coots, Inc. (WEL) while he was in possession of information, obtained from an insider at WEL, that another company was going to acquire WEL.
On February 25 and 26, and March 11 and 17, 2010, Hendry purchased 73,000 shares of WEL, paying between $1.73 and $2.16 per share. On April 9, 2010, the company announced that it had agreed to be acquired by Halliburton for $3 per share, at a total transaction value of approximately $204.4 million.
By April 12, 2010, the next trading day, WEL's stock price increased $0.67, or 25 percent, to $2.95 per share. Following the announcement of WEL's acquisition, Hendry sold all of his WEL shares for between $2.94 and $3 per share, realizing a profit of $69,955.
FINRA found that Hendry purchased shares of WEL while in possession of material, non-public information about the company's pending acquisition. FINRA also found that Hendry violated FINRA Rule 8210, which requires an individual under investigation to testify truthfully under oath, when he provided untruthful statements to OFDMI investigators, namely, that he had purchased shares of WEL based on his own research of the company and that he did not know anyone currently or formerly employed at WEL.
Cameron K. Funkhouser, Executive Vice President and Head of OFDMI, said, "This case is a great example of FINRA's continuing efforts to identify and seek prosecution of anyone who improperly uses insider information. Equally important, it shows that FINRA will deal aggressively with any individuals who lie to or mislead our investigators."
In settling this matter, Hendry neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2010, members of the public used this service to conduct 17.2 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing and enforcing rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our website at www.finra.org.