SEC Files Lawsuit Against Firm for Retrieving Press Releases

The Securities and Exchange Commission (SEC) filed a suit against a foreign firm and its CEO on February 26, 2007. The SEC charged that the firm hacked into the Commission's computer systems and churned more than $2.7 million. The company accomplished this by accessing press releases before their public release and trading on the nonpublic information without propriety.

The SEC through the lawsuit charged Blue Bottle for making unauthorized use of information to transact in securities of 12 or more US companies, two of them being Symantec and Alliance Bernstein Holding.

The SEC presented a request to the federal court to temporarily restrain Blue Bottle and freeze its assets. On February 26, 2007, a federal judge granted the request, said Kenneth Lench, a lawyer for SEC in a statement published by BusinessWeek.com. March 7 has been scheduled for a preliminary injunction hearing, he said.

The SEC, which filed the suit in US District Court, Manhattan, said in its complaint that although the defendants did fall into some losses because they traded prior to the news releases but they gained significant profits compared to the losses. According to the complaint, the firm started incurring profits in January 2007.

30-years old Stokes belongs to Guernsey and is the only proprietor and chief executive (CE) of Blue Bottle, the SEC said.

As per the account opening documents, the residential address of Stokes is in London, however, a probe finds that an accountant's and insolvency practitioner's firm occupies that address, said the regulator. In the company's articles of association, there is a Stokes' address in Dubai, UAE, said the SEC.

The SEC said that Blue Bottle has not forwarded any legal representative. Neither Stokes nor the company was available for comment.

The suit lists more companies that Blue Bottle traded with in insecurities. These are AllScripts Healthcare Solutions, Achillian Pharmaceuticals, Hornbeck Offshore Service, CACI International, BJ's Wholesale Club, Brady, Millipore, LeCroy, RealNetworks, and Odyssey Healthcare.

It is alleged that Blue Bottle traded through an online account that it opened in November 2006. The Commission said it was carrying on its investigation of Blue Bottle's fraudulent tactics.

Related article: SEC Imposes Trading Ban on 35 Companies

» SPAMfighter News - 3/12/2007