United States District Court, D. Oregon
U.S. SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
ROBERT M. MORANO, Defendant.
OPINION AND ORDER
A. HERNANDEZ, UNITED STATES DISTRICT JUDGE
enforcement action brought by Plaintiff U.S. Securities and
Exchange Commission, Defendant Robert M. Morano has
stipulated to entry of judgment against him for illegal
insider trading. Judgment, ECF No. 8. The Judgment
permanently enjoins Defendant from violating § 10(b) of
the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b),
and Rule 10b-5, 17 C.F.R. § 240.10b-5. Defendant has
agreed to disgorge $38, 242 in illicit trading profits, plus
prejudgment interest of $2, 317.
now moves for the imposition of a civil monetary penalty of
$114, 726, which is three times Defendant's illicit
profits, the maximum penalty allowed under the Insider
Trading Sanctions Act, 15 U.S.C. § 78u-1. Defendant, who
is representing himself, opposes a civil penalty.
parties agree that this court will decide whether to impose a
civil penalty and, if so, the amount of the penalty.
Defendant agrees that (1) he is “precluded from arguing
that he did not violate the federal securities law as alleged
in the Complaint”; (2) he “may not challenge the
validity” of the Consent or the Judgment; (3) for
purposes of Plaintiff's motion for civil penalties,
“the allegations of the Complaint shall be accepted as
and deemed true” by this court; and (4) this court
“may determine the issues raised in the motion on the
basis of affidavits, declarations, excerpts of sworn
deposition or investigative testimony, and documentary
evidence, without regard to the standards for summary
judgment” in Federal Rule of Civil Procedure 56(c).
following reasons, I grant Plaintiff's Motion for
Monetary Penalty and order that Defendant pay a penalty of
2010, Defendant began working for UTi Worldwide, Inc. (UTi)
as a senior communications specialist, working remotely from
his residence in Portland, Oregon. Compl. ¶ 9, ECF No.
1. UTi was “a global supply chain services and
solutions company . . . incorporated in the British Virgin
Islands and based in Long Beach, California.” Compl.
¶ 10. UTi's common stock was registered with
Plaintiff and traded on the NASDAQ.
testified at his deposition that his “role [at UTi] was
to basically develop or assist in the development of
marketing and corporate communications messages and content
for internal, meaning employee, or external, meaning
customers or the general public” through emails,
newsletters, brochures, or online postings. Morano Dep. 20,
ECF No. 20-2. Under his employment agreement and UTi policy,
Defendant “had a duty not to trade on or otherwise
misuse confidential information.” Compl. ¶ 12. UTi
prohibited its employees from “using material nonpublic
information for personal gain in connection with trading in
UTi securities.” Compl. ¶ 12. Defendant
“received training on [UTi's] insider trading
policy and affirmed that he read and understood the
policy.” Compl. ¶ 12.
several weeks in fall 2015, UTi negotiated privately with DSV
Air & Sea Holdings A/S (DSV), a Danish company seeking to
acquire UTi. Compl. ¶¶ 10, 11, 13. On October 8,
2015, DSV and UTi agreed that DSV would acquire UTi for $7.10
per share. Compl. ¶ 13. “The acquisition price
represented a premium of 50% over the market price of UTi
stock, and valued the acquisition at approximately $1.35
billion.” Compl. ¶ 13. DSV and UTi planned to
announce the agreement publically the next morning, October
afternoon of October 8, 2015, a UTi executive notified
Defendant by phone about DSV's pending acquisition of
UTi. Compl. ¶ 14. Defendant was to assist in preparing
the announcement of the acquisition. The UTi executive told
Defendant “that the information was confidential and
instructed him to strictly maintain the confidentiality of
the information about the acquisition until after the public
announcement the very next day.” Compl. ¶ 15.
after the phone call, Defendant “logged on to three
separate brokerage accounts that he controlled and purchased
in the open market a total of 17, 515 shares of UTi.”
Compl. ¶ 16. Defendant paid an average of $4.78 per
next day, October 9, 2015, DSV and UTi announced DSV's
purchase of UTi at $7.10 per share. After the announcement,
UTi's share price increased more than 50% on heavy
trading. UTi stock closed that day at $7.13 per share. Compl.
¶ 17. The next day, Defendant sold his UTi shares,
realizing $38, 242 in illicit profits from the sale.
2017, Plaintiff's investigators telephoned Defendant to
ask about his purchase of UTi stock on October 8, 2015.
During the phone call, Defendant told Plaintiff's
investigator that he was only a “peon” with UTi,
and did not have access to insider information about
DSV's acquisition. Morano Dep. 16. Defendant later
testified at his deposition that during the initial
conversation with Plaintiff, he “downplayed” his
knowledge of the acquisition, in part because he
“recognized, at least on a subconscious level, that I
had done something that I shouldn't have done and was
unwilling to acknowledge or admit that to myself, much less
to someone whose identity I wasn't sure about, ”
i.e., Plaintiff's investigator. Morano Dep. 19. Defendant
testified that he “sensed that it was wrong, that I had
an unfair advantage, but I really thought an insider was a
registered officer, or fiduciary, or someone with a 5 percent
or more . . . I thought I knew that it was wrong sort of
morally or ethically, but okay legally because, well, I'm
not an insider, so this isn't insider trading.”
Morano Dep. 34.
also testified that he had traded UTi's stock about eight
or nine times before his October 2015 trades. Defendant
testified that in early September 2015, he received a copy of
a press release on UTi's earnings before the release was
made public, and he
took it as good news and bought the stock. I really think
that I waited until the press release crossed the wire, but
that may not -- I've seen standards of two days -- two
business days for the information to become nonpublic, even
though it's been announced . . . giving the public two
days to absorb it and respond to it, which I certainly did
Morano Dep. 41. Plaintiff apparently lost money on his
September 2015 trading of UTi's stock. Fitzsimmons ...