Federal Indictment Charges Chicago Attorney With Insider Trading

Federal Indictment Charges Chicago Attorney With Insider Trading

Federal Indictment Charges Chicago Attorney With Insider Trading (Chicago, IL) – A Chicago attorney used insider information obtained from a friend to purchase shares of an education-technology company before it publicly announced strong quarterly earnings, according to an indictment returned in federal court.

The indictment accuses attorney DAVID SARGENT of obtaining material, non-public information from CHRISTOPHER KLUNDT, a management-level employee of the company and a friend since college.  The information pertained to the company’s 2020 first-quarter earnings, which Klundt knew would be strong based on internal meetings he had attended, the indictment alleges.  After receiving the information from Klundt, Sargent purchased numerous shares and call options of the company’s stock ahead of the earnings announcement and then sold them shortly thereafter, the indictment states.  In the interim, the company’s stock price increased.  Sargent made approximately $110,000 from the trades, the charges allege.

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From the Indictment

KLUNDT provided this information to SARGENT at a time when KLUNDT knew he was under a duty to protect the confidentiality of the information and to not use it-or provide it to anyone else to use-to trade in Company A’s securities. KLUNDT received a personal benefit by providing this information to SARGENT as a gift to a friend and with the intention to benefit SARGENT, and knowing that SARGENT would use the material, nonpublic information to trade in Company A’s securities.

SARGENT knew this information was material, nonpublic information that KLUNDT had disclosed to him in breach of KLUNDT’s duties to Company A and for SARGENT’s use in trading Company A’s securities. SARGENT further knew that KLUNDT received a personal benefit by providing him with the information as a gift based on their friendship and with the intention to benefit SARGENT.

The indictment was returned Monday in U.S. District Court in Chicago.  It charges Sargent, 37, of Chicago, and Klundt, 38, of San Francisco, Calif., with conspiracy, insider trading, and securities fraud.  Arraignments in federal court in Chicago have not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI.  Assistant U.S. Attorneys Matthew Getter and Vikas Didwania represent the government.

Copy of Indictment here

The public is reminded that an indictment is not evidence of guilt.  The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Federal Indictment Charges Chicago Attorney With Insider Trading

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