Crime in the Suites An Analysis of Current Issues in White Collar Defense

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August 17, 2012

Executive’s Internet Searches Give SEC the Road Map to Make an Arrest

By: Ifrah Law

The U.S. Securities and Exchange Commission has charged an executive at Bristol-Myers Squibb with insider trading, citing his Internet searches as support that he tried to cover up his illegal acts.

As a high-level executive in the treasury department at Bristol-Myers Squibb, Robert D. Ramnarine helped the company target, evaluate, and acquire other pharmaceutical companies. The SEC’s complaint, filed in U.S. District Court in New Jersey, alleges that Ramnarine used non-public information obtained in his professional capacity to buy and sell shares in the targeted pharmaceutical companies. According to the complaint, “Ramnarine traded in options of common stock of the soon to be acquired company. After the public announcement of each acquisition agreement, the price of the securities bought by Ramnarine went up and he sold at a profit.” These trades resulted in allegedly ill-gotten gains of at least $311,361.

In addition, Ramnarine was arrested and charged with three counts of securities fraud, each with a maximum sentence of 20 years in prison. He was released on a $250,000 bond.

This case is getting widespread attention not because of the nature of the crime or the amount of money involved, but because of the almost humorously transparent search terms that the SEC alleges Ramnarine entered into search engines regarding his activities, including “can stock option be traced to purchase inside trading,” “insider trading options trace illegal,” and “insider trading options.” According to the complaint, Ramnarine performed these searches the day before buying stock options in one of Bristol-Myers Squibb’s target companies.

Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit, explained these searches by saying, “Ramnarine tried to educate himself about how the SEC investigates insider trading so he could avoid detection, but apparently he ignored countless successful SEC enforcement actions against similarly ill-motivated individuals who paid a heavy price for their illegal trading.”

While we cannot jump to conclusions about why Ramnarine performed these searches, the timing in proximity to the trades is certainly suspect and will leave him with some explaining to do at trial. Ramnarine may not be the first person with an embarrassing search history, but he’s a reminder that it can come to light at any time. With that in mind, for the next time you’re researching a sensitive topic, here’s a link to encrypted Google to use on a public computer.