Ex-Heartland CEO Is Sued by SEC for Giving Deal Tip to Girlfriend
(Bloomberg) -- The ex-chief executive officer of a New Jersey-based payments company has been sued by the U.S. Securities and Exchange Commission over claims that he used a girlfriend to trade on inside information about the firm’s pending takeover.
Robert O. Carr, who was sued by Heartland Payment Systems LLC last month, tipped Katherine Hanratty that the firm he ran was going to be acquired by Global Payments Inc. and gave her $1 million to buy shares in a scheme to profit from the deal, the SEC said in a complaint filed Tuesday. Hanratty was also named in the regulator’s complaint, which said she sold the stock for a profit of $250,000 after news of the $4.2 billion acquisition became public in December 2015.
An attorney for Carr said in a statement after the company filed its suit that Global Payments withheld information that would show that the former executive hadn’t acted illegally, that the money he gave Hanratty was a gift from proceeds of a planned stock sale and that he’d received authorization for his transactions. Carr’s attorney, Michael McGovern, said important information regarding his client has also been shared with the SEC.
“Although not included in the SEC’s complaint, we have brought to the government’s attention exculpatory information regarding the legal advice Mr. Carr received directly from Heartland’s general counsel at the time these events were occurring,” McGovern said Tuesday. “We are continuing to discuss this matter with the SEC, and we remain confident that this matter will be resolved favorably.”
A lawyer for Hanratty didn’t return a phone call seeking comment.
The SEC claims that Carr violated his fiduciary duty by disclosing nonpublic information and that Hanratty knew or should have known that her trading of Heartland stock was illegal. The regulator is seeking a jury trial, demanding disgorgement of the trading profits and a ban that would keep Carr from serving as an officer or director of a public company.
©2018 Bloomberg L.P.