The Securities and Exchange Commission (SEC) and New York federal prosecutors have brought charges against the compliance chief of a Chinese payment processor for violating insider trading laws. Steven Teixeira, who held the position of chief compliance officer for the U.S. branch of LianLian Global, has pleaded guilty to the federal charges as part of a cooperation agreement. The SEC charges, however, are still pending.
Teixeira stands accused of obtaining insider information by surreptitiously gaining access to his girlfriend’s computer. Through this unauthorized access, he was able to view confidential meetings between investment bankers and companies. The information he obtained included details about Broadcom’s $65 billion acquisition of VMware, which was set to occur in 2022. Teixeira then allegedly shared this sensitive information with an associate, with the intention of making a profit.
The SEC claims that Teixeira obtained this insider information by accessing his girlfriend’s Outlook calendars and files. She worked as an executive assistant at an undisclosed investment bank in New York. The non-public information he acquired pertained to term sheet data and deal planning for various technology companies, including the VMware acquisition and Thoma Bravo’s planned purchase of Proofpoint. It is alleged that Teixeira used this information to make over $730,000 in profit.
Teixeira’s girlfriend, who remains unnamed in the complaint, requested that he check her work email while she was away from her computer during the workday. She also asked him to notify her if any emails required her attention. It was during these interactions that Teixeira is believed to have gained unauthorized access to her computer and obtained the confidential information.
Associate Implicated in Insider Trading Scheme
In addition to Teixeira, his associate, Jordan Meadow, has also been charged with violating federal insider trading laws. Meadow, an investment advisor, allegedly used the insider information provided by Teixeira to benefit himself and his clients. By steering his clients towards lucrative opportunities based on the confidential information, Meadow was able to earn substantial commissions, amounting to “hundreds of thousands” of dollars.
Meadow now faces federal charges in the Southern District of New York, which were unveiled alongside Teixeira’s charges. The SEC’s Philadelphia associate regional director, Scott Thompson, expressed his condemnation of the accused individuals, stating, “Our complaint alleges brazen betrayals of trust by Teixeira, who misappropriated information from his girlfriend’s laptop to make a quick buck, and by industry-veteran Meadow, who was all too eager to use the information to line his pockets.”
It is worth noting that Thoma Bravo had already taken Proofpoint private in a $12.3 billion deal in 2021, which aligns with the timeframe of Teixeira’s alleged insider trading activities. Specifically, Teixeira purchased options on Proofpoint stock on April 22, 2021, just days before the official announcement. On the other hand, Broadcom’s acquisition of VMware has faced delays due to regulatory issues.
As the legal proceedings unfold, Teixeira and Meadow will have to face the consequences of their alleged insider trading activities. The charges brought against them highlight the importance of maintaining the integrity of confidential information within the financial industry and serve as a reminder that those who exploit such information for personal gain will be held accountable.
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