The Securities and Exchange Commission Wednesday alleged that a former managing director of the Nasdaq Stock Market stole and used confidential information while working as a market intelligence gatherer for the electronic exchange.
The federal regulator charged Donald L. Johnson with insider trading, charging that he used the information he stole to achieve personal profits of more than $755,000 over a period of three years. Johnson re-used information about companies that were about to make "market-moving public announcements,'' the SEC said.
The announcements included corporate leadership changes, earnings reports and forecasts, and regulatory approvals of new pharmaceutical products.
Johnson, the SEC said, often placed illegal trades directly from his work computer through an online brokerage account in his wife’s name.
In a plea agreement Thursday in federal court in Alexandria, Johnson admitted to more than half a dozen trades in which he used non-public information to profit, according to Associated Press.
Johnson faces up to 20 years in prison, the AP reported.
“This case is the insider trading version of the fox guarding the henhouse,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Instead of protecting Nasdaq client confidences, Johnson secretly traded on client information for personal gain, even using his NASDAQ office computer to make the trades.”
According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Johnson illegally traded in advance of nine announcements involving NASDAQ-listed companies from August 2006 to July 2009.
Johnson took advantage of both favorable and unfavorable information that was entrusted to him in confidence by NASDAQ and its listed company clients, shorting stocks on several occasions and establishing long positions in other instances.
Johnson lives in Ashburn, Va., and worked in various positions for the NASD and NASDAQ for 20 years until his retirement from NASDAQ in September 2009.
According to the SEC’s complaint, Johnson worked in NASDAQ’s Corporate Client Group (CCG) from January 2000 to October 2006. He then transferred to the Market Intelligence Desk, a specialized department within the CCG that provides issuers with general market updates, overviews of their company’s sector, and commentary regarding the factors influencing day-to-day trading activity in their stocks.
This latest chapter is incredible. I am going to reread it again but the reveleations and implications certainly gives the reader much to think about. Who/what will be revealed in upcoming chapters? I would bet a lot of folks are very very nervous. Can you imagine how some NYPD and NYFD members will feel after reading this chapter and what their reactions might lead them to do?
Market Data 
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