An investment banker’s husband accused of eavesdropping on her discussing a $2.6 billion M&A deal was charged with insider trading by the SEC

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Virgin Atlantic

  • The Securities and Exchange Commission accused a New York banking consultant of listening to his fiancée’s calls about Alaska Airlines’ 2016 acquisition of Virgin America, a deal she worked on as an investment banker.
  • The SEC said he bought options based on what he heard and made more than $250,000 in less than a month.
  • The SEC charged the accountant with insider trading.

A New York accountant has to pay more than $500,000 to the Securities and Exchange Commission to settle insider-trading charges, the agency said on Monday.

The SEC accused Peter Cho, 39, who is married to an investment banker, of eavesdropping on her calls as she worked on Alaska Airlines’ $2.6 billion acquisition of Virgin America in 2016 and using what he heard to buy options in Virgin stock over the evolution of the deal, betting the price would rise.

Ultimately, he made more than $250,000 on his trades, the SEC said.

Bank of America and UBS led the deal for Alaska, but the SEC did not name either the investment banker’s employer or Cho’s accounting firm in its complaint. Bank of America declined to comment.

“UBS takes client confidentiality extremely seriously and fully cooperated with this investigation,” a spokesman said. “After our own review, we agree with the complaint that our employee was not involved in the alleged trading activity.”

Cho’s wife – his fiancée at the time – spent long hours on the deal, working nights and weekends in the one-bedroom Manhattan apartment the couple shared, as well as on vacation, the SEC said in the complaint. The agency alleged that as the deal progressed, Cho used what he heard from her work to buy various call options for $4,124.49, eventually making $251,386.19 in profit. On multiple days, Cho’s trading made up 100% of the daily trading volume in Virgin stock, the SEC said.

The SEC said that Cho, who at the time of his trading had been in a relationship with the banker for five years, “owed a duty of trust or confidence” to her “based on their relationship which included a history, pattern, and practice of sharing confidences.”

The SEC said that Cho did not discuss his trading with his partner, including the money he made, and that because Cho worked as a manager at an accounting firm, where he provided financial advisory services to bank clients, he was trained on insider trading and the protection of confidential information.

In settling the charges, Cho did not admit or deny the SEC’s allegations but agreed to avoid violating the SEC’s antifraud rules, to return the $251,386 with interest, and pay a one-time penalty of the same amount, for a total of $532,777.