The Securities and Exchange Commission recently accepted an offer of settlement submitted by Filip Szymik, in anticipation of a cease-and-desist proceeding resulting from the purported insider trading in Herbalife, Ltd. stock.

According to the SEC, Szymik used advance information about a negative review of Herbalife’s stock by the hedge fund Pershing Square Management L.P., which he learned of through his roommate, an analyst at Pershing. The SEC found that Pershing’s review alone was market moving and constituted
inside information. Szymik related the information to his friend, Jordan Peixoto, and Peixoto used the information to purchase a number of Herbalife put options. AfterPershing’s evaluation became public, Herbalife’s stock fell 39 percent by close of trading, increasing the value of the put options by approximately $340,000, though it ultimately only resulted in $47,100 in actual profits. According to the SEC, by providing Peixoto with the advance information, Szymik violated the relationship of trust and confidence between him and his roommate, violating Section 10(b) of the Securities Exchange Act of 1934.

Without admitting or denying the SEC’s findings, Szymik agreed to settle and pay a civil penalty of $47,100, and to cease and desist from any further violations of Section 10(b). Szymik’s settlement, which allowed him to neither admit nor deny the findings alleged, continues a string of similar non-admissions despite statements made by the Chairperson of the Securities and Exchange Commission, Mary Jo White, on September 26, 2013, that the SEC would be limiting the practice.

In the Matter of Szymik, No. 3-16183 (SEC Sept. 30, 2014).