Damian Williams, the United States Attorney for the Southern District of New York, announced today that DAVID STONE was sentenced by U.S. District Judge Mary Kay Vyskocil to 28 months in prison for his participation in an insider trading scheme. STONE previously pled guilty to one count of securities fraud.
U.S. Attorney Damian Williams said: “David Stone unlawfully accessed pre-publication stock picks from an investment advice service so that he could beat the markets and generate millions in trading profits for himself. Today’s sentence reflects that this Office will find and prosecute those who seek to profit at the expense of the integrity and fairness of our financial markets.”
According to the allegations in the Information and statements made in public court proceedings and filings:
From 2020 up to at least March 2022, DAVID STONE exploited market-moving stock recommendations made by an investment recommendation service (“Advisor-1”) before those recommendations were released to paying subscribers. STONE, an I.T. professional, accessed Advisor-1’s computing system using log-in credentials he obtained without authorization and used his improperly obtained access to view information relating to Advisor-1’s recommendations before they were announced to Advisor-1’s paying subscribers.
Advisor-1’s stock recommendations typically lead to higher closing prices for the recommended stock as compared to the prior day’s closing price. By trading on those recommendations before they were announced, STONE was able to obtain significant profits unavailable to other market participants. In fact, across all the brokerage accounts he traded in, STONE realized gains of at least $4.8 million.
In addition to his own trading, STONE supplied these stolen trading tips to another person (“Tippee-1”). From in or about January 2021 up to and including in or about March 2022, on approximately 45 different days, STONE sent emails to Tippee-1 providing stock names and/or ticker symbols ahead of Advisor-1 announcements of stock recommendations to its paying subscribers. A brokerage account associated with Tippee-1 traded ahead of Advisor-1’s recommendations on more than a dozen occasions. As a result of that trading, Tippee-1 profited more than approximately $2.7 million.
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In addition to the prison sentence, DAVID STONE, 37, of Nampa, Idaho, was sentenced to three years of supervised release and ordered to forfeit $2,883,800 and particular shares of stock, to pay $344,000 in restitution to Advisor-1, and to pay a $20,000 fine.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Samuel P. Rothschild and Andrew Thomas are in charge of the prosecution.
originally published at HUMAN RIGHTS - USA DAILY NEWS 24