Arlington, Virginia-based investment firm Friedman, Billings, Ramsey & Co. (FBR) settled claims of insider trading and agreed to pay roughly $7.7 million to federal and industry watchdogs this week, according to the Associated Press.The agreement with the Securities and Exchange Commission and the National Association of Securities Dealers stems from claims that in 2001, the company improperly traded shares of CompuDyne, a security provider based in Annapolis, Md. FBR Founder Emanuel J. Friedman, who is also the company’s former chief executive and co-chairman will pay a separate $1.25 million civil fine and be barred from working in a subadvisory group for two years. He is still allowed to maintain his position and responsibilities at EJF Capital, a company he started in February. Former Chief Compliance Officer Nicholas Nichols will pay $110,000 and Scott Dreyer, former head trader, will pay $19,870.
The charges, first brought last April, drew industry-wide attention because FBR, a brokerage, was charged with insider trading. SEC Enforcement Director Linda Thomsen said in a statement that brokerages should be especially keen to protect the private information with which they are entrusted.