FINRA bars US broker for TEPCO insider trading


FINRA has barred an American equity trader for his use of non public information to short sell a Japanese stock making $206,000 in personal profits (2 July 2014).

The regulator claimed Kenneth Ronald Allen, former First New York Securities trader, had acted upon non public information gleamed from a consultant whose source was a Nomura Securities employee in Tokyo. The Japanese source knew details of a Tokyo Electric Power Company Inc [TEPCO] planned secondary public offering of its shares. The US based trader purchased and then sold off stocks ahead of TEPCO's public announcement and when the stock price dropped, Allen made illegal profits.

The regulator's Cameron K. Funkhouser, executive vice president of FINRA's office of fraud detection, said traders registered with FINRA are expected to observe high ethical standards and conduct themselves in accordance with just and equitable principles of trade regardless of where specific securities are listed.

FINRA's press release added - Allen neither admitted nor denied the charges, but consented to the entry of FINRA's findings.