DRC congratulates Michael English, Esq., Evan Cohen, Esq., and Benjamin Arrow, Esq., of Finn Dixon & Herling LLP on their complete defense victory and vindication of their client in SEC v. Chad McGinnis, 14-CV-0006 (D.Vt.). The SEC accused defendant Chad C. McGinnis of insider trading. Mr. McGinnis was an employee in the IT department of Vermont-based Green Mountain Coffee Roasters, a publicly-traded company (GMCR).
The SEC alleged that over the course of 13 earnings periods between 2010 and 2013, Mr. McGinnis made a 12,000% rate of return trading GMCR stock, even though he had no formal investment training or experience. Although there was no direct evidence that McGinnis possessed or traded on material non-public information, the SEC alleged that McGinnis had access to inside information by virtue of his position in Green Mountain's IT department, which provided him with administration-level credentials (user ID and password) that could access restricted folders containing draft SEC filings, press releases, or other earnings reports.
Despite the fact that Mr. McGinnis was permitted and required to use these credentials to complete his work at Green Mountain, the SEC characterized them as a "skeleton key" to GMCR's servers. The SEC argued that McGinnis's unrestricted access to material non-public information, in addition to his incredible returns as an amateur trader, supported the conclusion that he engaged in insider trading.
The SEC alleged that over the course of 13 earnings periods between 2010 and 2013, Mr. McGinnis made a 12,000% rate of return trading GMCR stock, even though he had no formal investment training or experience. Although there was no direct evidence that McGinnis possessed or traded on material non-public information, the SEC alleged that McGinnis had access to inside information by virtue of his position in Green Mountain's IT department, which provided him with administration-level credentials (user ID and password) that could access restricted folders containing draft SEC filings, press releases, or other earnings reports.
Despite the fact that Mr. McGinnis was permitted and required to use these credentials to complete his work at Green Mountain, the SEC characterized them as a "skeleton key" to GMCR's servers. The SEC argued that McGinnis's unrestricted access to material non-public information, in addition to his incredible returns as an amateur trader, supported the conclusion that he engaged in insider trading.
After a nearly two-week trial and four days of deliberations, the Vermont jury rejected the SEC's theory and found in favor of the defense. DRC assisted the Finn Dixon & Herling trial team with a focus group, demonstrative aids, jury selection, and technical support during the trial.