SEC Charges Two Former Accounting Firm Employees with Insider Trading

The Securities and Exchange Commission today charged two former San Francisco-area employees of PricewaterhouseCoopers LLP (PwC) with insider trading.

According to the Commission’s complaint, Gregory B. Raben, 30, a former PwC auditor, and William Patrick Borchard, 28, a former senior associate in PwC’s Transaction Services Group, used their access to sensitive information about PwC’s clients to allow Raben to buy stock ahead of a series of corporate takeovers. Without admitting or denying the allegations, Raben and Borchard agreed to a settlement including monetary penalties.

“Today’s charges of insider trading by accounting firm employees are another example of the Commission’s commitment to exposing insider trading by industry professionals who have access to confidential market information unavailable to the investing public,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.  “Raben and Borchard violated PwC’s rules on keeping client information strictly confidential and ignored their duties to their employer and its clients,” added Marc Fagel, Co-Acting Regional Director of the SEC’s San Francisco Regional Office.

The Commission’s complaint, filed in federal district court in San Francisco, alleges that Borchard learned about the potential acquisition plans of PwC clients through his position in the Transaction Services Group, where he handled financial due diligence for clients interested in mergers or acquisitions. On six separate occasions in 2006, Borchard told his friend and co-worker Raben about these confidential plans. Raben then used the information to trade before the news was released to the investing public. The pair’s scheme continued until October 2006, when it was uncovered by PwC’s Office of General Counsel, which referred the matter to the Commission and cooperated with the SEC staff’s investigation.

According to the Commission’s complaint, Raben netted unlawful trading profits of more than $20,000 by buying stock ahead of public announcements disclosing the acquisitions and then selling his shares. Raben also tipped two other acquaintances about two of the acquisitions, allowing them to make several thousand dollars in unlawful trading profits.

Raben (now of Louisville, Ky.) has agreed to a permanent injunction from further violations of the antifraud provisions of the federal securities laws. He will disgorge his trading profits and those of the two acquaintances he tipped, altogether totaling $23,879.22, and will pay a civil penalty of $23,879.22. Borchard (now of Chicago), a licensed Certified Public Accountant, has consented to a permanent injunction and a civil penalty of $20,835.57 (equal to Raben’s trading profits), as well as an order denying him the privilege of appearing or practicing before the Commission as an accountant, with the right to apply to resume appearing or practicing before the Commission after three years.