Complaint says firm may have unwittingly profited from the trades.
The Securities and Exchange Commission has charged former Raymond James Financial Services Inc. broker Charles Adams with insider trading relating to the 2008 acquisition of Rohm & Haas Co. by Dow Chemical Co.
Raymond James is also listed as a relief defendant in the case, meaning that the company might have unwittingly benefited from the alleged illegal trading activity.
Mr. Adams, 59, who worked for Raymond James from 1996 through 2011, now works at SagePoint Financial Inc. He did not respond to a request for comment.
Raymond James representatives did not respond to a request for comment.
The complaint, filed Monday in the U.S District Court for the Eastern District of Michigan, names as defendants Mr. Adams along with former Dow Chemical vice president of information systems Mack Murrell and his longtime friend David Teekell, 53, who was a client of Mr. Adams'.
According to the complaint, Mr. Murrell, 53, received inside information on the pending Rohm acquisition through his then-live-in girlfriend and now wife, Stacey Murrell, a former administrative assistant to Dow's chief financial officer during the acquisition negotiations.
The SEC's investigation revealed that in the days and weeks leading up to the announcement of the Rohm acquisition, Mr. Adams and Mr. Teekell began purchasing Rohm common stock and call options.
In addition to purchasing call options in his own account, Mr. Adams purchased stock in two discretionary customer accounts.
The purchases by Mr. Adams and Mr. Teekell continued until the day before the July 10, 2008, acquisition announcement, when the price of Rohm stock jumped 64% to approximately $74 a share.
The complaint alleges that Mr. Teekell made an illicit profit of $534,526, while Mr. Adams and his discretionary clients made illicit profits of $107,043.
The complaint states that Raymond James made illicit profits of $373,497 when the pair decided not to keep certain Rohm options that Mr. Adams had purchased in Mr. Teekell's account.
Mr. Murrell, who is believed to have shared the inside information with Mr. Teekell, apparently acted without the help of a financial professional and used the inside information to load up on more Dow Chemical stock.
Prior to the public announcement of the deal, Mr. Murrell took $74,464 out of two funds in his 401(k) and invested the amount in Dow stock, resulting in a 68% weighting in Dow stock in his 401(k) plan.
Mr. Murrell resigned from Dow in March. Ms. Murrell, 48, is listed as having retired from Dow in August 2012. The couple lives in Saginaw, Mich., near Dow's Midland corporate headquarters.
The couple could not be reached for comment.
The SEC refused to comment beyond the official statement.
Mr. Teekell, without admitting or denying the SEC's allegations, has agreed to pay $534,526 in disgorgement, $105,346 in prejudgment interest and a penalty of $534,526. The settlement is subject to court approval.
