A Boston federal jury ruled in favor of the Securities and Exchange Commission in a case against a former Fidelity Investments trader accused of sharing inside information on Covad Communications with his mother, tipping her off when the fund giant was about to make a large purchase of the stock.
The SEC alleged that between July and September 2003, David Donovan obtained confidential information from Fidelity's internal database on the stock and prompted his mother to buy shares. Donovan must repay $398,000 in ill-gotten gains, interest and penalty. The jury did not find co-defendant, David Hinkle, guilty, nor did it find Donovan guilty of passing insider information to Hinkle. Donovan’s mother was not named in the suit.
“This verdict is a victory for investors, and it demonstrates that we will continue to hold Wall Street insiders accountable for insider trading,” said SEC Boston Regional Director David Bergers.