WASHINGTON (Legal Newsline) — The Securities and Exchange
Commission (SEC) announced this week that San Francisco-based Artis Capital
Management and Michael W. Harden will settle allegations of failing to detect
According to the SEC, Artis Capital failed to detect the
insider trading of employee Matthew G. Teeple. Harden, Teeple’s
supervisor, allegedly failed to appropriately respond to red flags that should
have alerted him and the company to Teeple’s misconduct. The SEC
found out about Teeple’s alleged insider trading with
source David Riley during a broader case involving expert networks and the
trading activities of hedge funds.
“Hedge fund advisory firms and supervisors must take all
reasonable measures necessary to prevent insider trading, yet Artis Capital and
Harden failed to take any action at all in response to Teeple’s highly
profitable and suspiciously timed trading recommendations,” said Sanjay Wadhwa,
senior associate director of the SEC’s New York Regional Office.
Artis Capital will disgorge all profits made from Teeple’s
trading, totaling $5,165,862, plus interest of $1,129,222. It will also pay a
penalty of $2,582,931. Harden will pay $130,000 and be suspended from the industry
for a year.
“By disgorging the illicit profits that Artis Capital
obtained through Teeple’s misconduct, this settlement ensures that the firm and
Harden will not be rewarded for their negligence,” said Joseph G. Sansone,
co-chief of the SEC Enforcement Division’s market abuse unit.