Corporate Officer Settles Insider Trading Charges After Working on the Deal

Deterrence can, and typically is, a most difficult issue. You can tell people that they should not do something and maybe they will listen. You can show them that it is illegal and maybe it will sink in. But maybe not. Clearly insider trading is like this.

On insider trading the Commission and others repeatedly conduct programs and give lectures on it. Many organizations have programs on it as do any number of companies. And, the Commission continually brings insider trading cases in which the defendant often pays large penalties and, more importantly, destroys his or her credit record which will forever carry the badge of fraud. Yet it continues. Just take a look at the Commission’s most recent case in the area – SEC v. Xie, Civil Action No. 2:24-cv-09801 (D. N.J. Filed October 15, 2024).

Defendant Ruimin Xie is a resident of New Jersey. During the period of this case he was the Director of Analytical Development at BELLUS Health.

On April 18, 2024, a takeover deal was announced involving his employer: GKS plc would acquire Canadian-based BELLUS. Earlier in the month Defendant had been tasked with conducting due diligence for the deal. After finishing his assignment, Defendant did something he had never done – Mr. Xie purchased shares of BELLUS Health. He continued to purchase shares until April 17 when he stopped. By that time he had acquired over 7,000 shares, although is last order was not filled. The deal was announced the next day.

Following the deal announcement Defendant sold all of his shares. He had profits of over $59,000. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5.

To resolve the matter Defendant consented to the entry of a permanent injunction based on the Section and Rule cited in the complaint. In addition, he agreed to pay disgorgement of $59,408.42, prejudgment interest of $6,800.89 and a penalty equal to the amount of his trading profits. In addition, he is be barred from serving as an officer or director of a firm for five years. More importantly his credit record is now for ever stained with the word “fraud.” Perhaps he has learned now. See Lit. Rel. No. 26162 (October 17, 2024).