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All in the Family: SEC Charges Corporate Controller and His Brother-In-Law with Insider Trading Ahead of Merger Announcement


The Securities and Exchange Commission (“SEC”) charged the former Corporate Controller of CEB Inc. and his brother-in-law with insider trading in advance of a public announcement about CEB’s acquisition for $2.6 billion. The alleged insider trading scheme generated profits of $296,000.

According to the SEC’s complaint, William D. Wright learned non-public information about the acquisition of CEB while serving as a senior accounting officer of the company. In the months leading up to the merger announcement, the complaint alleges, Wright repeatedly tipped his brother-in-law, Christopher J. Clark, about the impending acquisition.


The complaint alleges that based on the information tipped by Wright, Clark purchased highly speculative, out-of-the-money call options and directed his son to purchase the same options in the son’s account. As the date of the announcement approached, Clark allegedly took aggressive steps to fund purchases of additional out-of-the-money CEB options, including liquidating his wife’s IRA, nearly maxing out a line of credit, and taking out a loan on his car. The options Clark allegedly purchased were so speculative that Clark – alone or with his son – were the only people to buy those options on all but one of the days they traded. As alleged, Clark and his son made profits of more than $243,000 and $53,000, respectively.

The SEC’s complaint charges Wright and Clark with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It seeks permanent injunctions, civil penalties, and as to Wright, a bar from serving as an officer or director of a public company.

Enforcement Trends

As you can see by the chart above, SEC Enforcement Actions have increased over the years, yet insider trading cases have not. This appears a result of a shift in priorities – possibly cyber-related fraud.

Board Oversight and Awareness

Volatile stock markets are creating more opportunities for insider trading.

I understand insider trading seems to be relevant to the regulators because of the message It sends. So boards shouldn’t be fooled by the lack of insider cases brought by the SEC. In fact, The Enforcement Division of the SEC has already advised it will scrutinize the securities trading of corporate insiders more closely.

Also, boards need to understand the risks of the COVID-19 pandemic. For example – Remote working presents unique opportunities for disseminating—advertently or inadvertently—material nonpublic information.

Most boards and audit committees understand that controls are not a bad thing. Controls can deter bad things from happening but can also make good things happen. Gauging senior management attitude towards controls is imperative as a board member because this is part of the tone from the top! If your company has an atmosphere of secrecy and distrust, things can get out of control quickly or already be out of control.

Myth- Internal control starts with a strong and available set of policies and procedures.  Reality – Internal control starts with a strong control environment[1].

In the future, I predict that enforcement priorities will more likely than not change, which could impact the number and types of cases brought forward, including insider trading, books and records, and internal control issues.

I welcome your comments and thoughts.


Jonathan T. Marks, CPA, CFF, CFE

[1] Control Environment is the set of standards, processes, and structures that provide the basis for carrying out internal control across the organization. The board of directors and senior management establish the tone at the top regarding the importance of internal control, including expected standards of conduct.



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