U.S. Attorney Jay Clayton announced on Mar. 30 the unsealing of an indictment charging Ronald Smith, a former registered broker at a New York City brokerage firm, with securities fraud, wire fraud, falsification of records, and conspiracy. The charges stem from an alleged insider trading scheme involving confidential corporate deal information stolen from an investment bank.
The case is significant as it highlights concerns about transparency and fairness in securities markets. According to Clayton, “As alleged, Ronald Smith used confidential deal information stolen from an investment bank in New York City to generate millions in profits for himself, his girlfriend, and his clients.” He added that “the hallmarks of our world-leading securities markets are transparency and fairness. Insider trading undermines those principles, and our Office will continue to work vigorously to hold insider traders accountable.”
According to the indictment unsealed in Manhattan federal court, Smith worked closely with fellow broker Jordan Meadow at the brokerage firm. Meadow began receiving nonpublic information about planned corporate acquisitions from Steven Teixeira who accessed confidential documents on his then-girlfriend’s computer—an executive assistant at an investment bank. This information included details about planned acquisitions of Score Media and Gaming Inc., as well as VMware Inc.
Smith and Meadow allegedly traded on this information before public announcements were made regarding these acquisitions, earning substantial profits for themselves and their clients. Specifically, Smith earned approximately $484,000 on Score Media trades and $47,000 on VMware trades; he also earned his girlfriend around $25,000 through similar trades while jointly making nearly $5 million for their clients.
When contacted by FINRA in the fall of 2021 regarding their trading activity in Score Media shares, both brokers coordinated false responses claiming their decisions were based solely on publicly available research rather than material nonpublic information.
Smith faces multiple counts including three counts of securities fraud under Title 15 (maximum sentence: 20 years each), one count under Title 18 (maximum sentence: 25 years), one count each of wire fraud and falsification of records (maximum sentence: 20 years each), along with two counts of conspiracy (maximum sentence: five years each). Sentencing will be determined by the judge if there is a conviction.
Clayton praised the Federal Bureau of Investigation’s efforts in this case and thanked the U.S. Securities and Exchange Commission for filing a separate action.
