Capturing the “Bull”: US Attorney and SEC Deal With “Inside” Tipper
On Thursday, April 14, 2022, Apostolos Trovias, a 31-year-old Greek national also known as “The Bull,” pled guilty to securities fraud in a case prosecuted by the U.S. Attorney for the Southern District of New York (“SDNY”) in the Federal Court for the SDNY. A July 19, 2022, Press Release issued by the U.S. Securities and Exchange Commission (“SEC”) disclosed that Trovias was “detained in Peru in May 2021 in connection with the criminal case and was extradited to the United States.” The transcript of the SDNY Court proceeding (attached as an Exhibit to the Consent to Final Judgment in the SEC’s civil case) reveals that Trovias spent 10 months in confinement in Peru pending his extradition to the United States. He spent an additional month in a correctional facility in New York. The press release also reports that Trovias “was sentenced to time served and ordered to forfeit $6,700 in proceeds from his scheme.” As set out in the transcript, Trovias was informed that he probably faced deportation as a convicted felon. He undertook to return to Greece.
On Tuesday, July 19, 2022, Trovias consented to the entry of a final judgment in the Federal Court for the SDNY for committing securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended, and of SEC Rule 10b-5 thereunder. That judgment permanently enjoined him from violating Section 10(b) and Rule 10b-5 and “from establishing or operating any website permitting the offer, sale, or purchase of nonpublic information of any issuer of publicly traded securities.” Trovias was also ordered to disgorge his ill-gotten gains together with prejudgment interest totaling $6,702.49. The SEC agreed to the Court’s deeming that payment of the disgorgement and interest amount was satisfied by the forfeiture order entered against Trovias in the criminal case.
As set out in the press release, Trovias offered to sell “insider trading tips” on Dark Web marketplaces. He claimed that the information he was offering for sale was derived from order-book data and pre-release earnings data obtained from a securities trading firm. Acting under his pseudonym “The Bull,” Trovias said he received the data from an employee of the trading firm. He allegedly sold, for $6,700, over 100 subscriptions for daily tips to investors via the Dark Web. An Aug. 3, 2021, Blog “Insider Tips: And That Is Bull,” authored by me with the assistance on cyber technologies provided by my former colleague Rebecca Warren (now an in-house General Counsel), discussed the filing of a Complaint by the SEC and the parallel criminal action by the U.S. Attorney against Trovias, including a discussion of the Dark Web. That Aug. 3 Blog also detailed the specifics of Trovias’s subscription offerings and details as to how his illegal actions were discovered (N.B in an operation like his, never try to sell inside information to an undercover IRS agent). The Aug. 3 Blog also extends the points made in a March 30, 2021, Blog “Under the Cover of Darkness: Insider Trading and the Dark Web,” co-authored by Rebecca and me.
In the August 2021 Blog, I noted that Trovias was a foreign national whose then-current location was unknown, so “the outcome for Trovias is uncertain.” That uncertainty has now been resolved. The Crypto Assets and Cyber Unit (the “CAC Unit”) in the Commission’s Division of Enforcement conducted the SEC investigation. The CAC Unit was created in 2017 to deal with the growing number of problems and frauds involving crypto assets and/or cyber activities. That Unit has, as of May 3, 2022, been materially increased in size with the addition of 20 technicians, accountants, and attorneys with technical skills in the CAC areas. Those considering unlawful actions or omissions involving crypto assets and/or cyber technologies and securities should be warned that the SEC “cops” are on the “beat.”
If you have any questions concerning this post or any related matter, please feel free to contact me at pdhutcheon@norris-law.com.