A former Green Mountain Coffee Roasters system administrator faces charges of insider trading that netted $7 million for himself and a friend. The two were charged July 24. A hearing is scheduled for August 7 in the U.S. District Court in Connecticut.
The Securities and Exchange Commission alleges that Chad McGinnis, 35, of Morrisville, improperly accessed shared files and employee emails to find out what to expect from earnings reports before they were released.
Forbes reports that Green Mountain Coffee Roasters, based in Waterbury, has seen an average 21 percent year-over-year growth for the last four quarters.
The charges detail communications between McGinnis, who worked in Waterbury, and Sergey Pugach, an “application architect” for Aetna, Inc., in Hartford, Conn. Pugach’s mother Bella Pugach is also named in the case as a relief defendant.
McGinnis and Puglach are long-time friends and former co-workers, according to SEC documents. Having both attended Fairfield University, the two went on to work at Unilever in Trumbell, Conn., as a “Desktop Architect” and “Programmer,” respectively.
“Put simply,” the complaint says, “they have correctly predicted the reaction of GMCR’s stock price to twelve out of the last thirteen quarterly earnings announcements.”
Donald Hoerl, Director of the SEC’s Denver Regional Office, said, “The timing of their trades was consistently and exceptionally successful, but their scheme ultimately was not.”
Between 2010 and 2013, McGinnis traded ahead of 10 earnings releases, making “well over $2 million,” the SEC charges, while Pugach traded ahead of 12 earnings releases to the tune of more than $5 million.
Pugach’s mother in Brooklyn, N.Y., allegedly made almost $40,000 from the illegal trades. She is not implicated in any wrongdoing, however.
All the defendants’ assets have been frozen as requested by the SEC. The commission requested a jury trial, which is expected to be granted.
