In an SEC investigation, Kenneth F. Wrangell was contacted by SEC Investigators regarding his suspicious trading activities regarding Mercer Insurance Group, to which Wrangell offered his full and expedient cooperation. His cooperation resulted in the SEC obtaining details of his trading on confidential information that resulted in direct evidence against his accomplices. Without admitting or denying any allegations, Wrangell agreed in a settlement to fully disgorge his ill-gotten gains of $41,000 and pay prejudgment interest. However, due to his prompt cooperation in voluntarily offering evidence, the prejudgment interest was reduced.
Wrangell’s cooperation led to allegations that Thomas Davis Jr. breached his fiduciary duty to Mercer Insurance Group when he tipped his friend, Mark W. Baggett, nonpublic information which Baggett later provided to his golfing partner Kenneth F. Wrangell. The nonpublic information that Davis tipped was related to Mercer entering into negotiations to potentially be acquired by United Fire & Casualty Company. Simply mentioning the confidential and nonpublic information led to the allegations of violating Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5.
Both Davis and Baggett also entered into settlement agreements where neither would admit nor deny the allegations. As part of the settlement, Baggett also would be required to disgorge his ill-gotten gains as well as receive a penalty which will be determined by the court. While Davis did not obtain any illicit profits, his act of tipping the others ended in an agreement to be barred from serving as an officer or director of a publicly-traded company.
For further information on these SEC rules or any other topic, please contact Andrew Deddeh at (619) 278-0020 or firstname.lastname@example.org.