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Southern District of New York | Finance Director Charged With Insider Trading
United States Attorney for the Southern District of New York, Jamie McDonald, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), James C. Barnacle, Jr., announced today the unsealing of an Indictment charging JESSE MITCHELL with securities fraud. The charges arise from an alleged insider trading scheme in which MITCHELL traded on misappropriated material nonpublic information ahead of public earnings announcements by his then-employer, The Trade Desk (“TTD”) and, as a result, generated more than $338,000 in profits. MITCHELL was arrested today and will be presented in the U.S. District Court for the Central District of California. The case has been assigned to U.S. District Judge Jennifer H. Rearden.
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Around June 2024, MITCHELL began working at TTD, a publicly-traded multinational technology company, as a Senior Director in TTD’s financial planning and analysis team. In that role, MITCHELL had access to TTD’s confidential financial information and results, including revenue and earnings results and other financial metrics, before they were publicly disclosed. By virtue of his employment, MITCHELL owed a duty of trust and confidence to TTD and was prohibited from misusing or disclosing TTD’s confidential information for personal gain.
by DOJ Press Releases
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👉 Buying put options days before your own company's significant earnings miss, while you're a senior FP&A manager, is pretty much a guaranteed way to get investigated, if not sent to prison.
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Fashion CEO Hunsicker Gets Five Years for $300 Million Fraud
Christine Hunsicker, founder of the fashion-rental and technology company CaaStle Inc., was sentenced to five years in prison for defrauding investors out of $300 million.
The prison term was much shorter than the 12 1/2 years sought by prosecutors, who compared Hunsicker to Theranos Inc. founder Elizabeth Holmes. Holmes, who is serving a 10-year sentence for an $800 million fraud tied to her blood-testing startup, and Hunsicker both “destroyed more wealth than most people could imagine,” the government said in a court filing.
by bloomberg.com
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👉 FT further reports that Hunsicker's defense relied on a head injury she sustained from a falling mirror that limited her executive function during the scheme. In response, prosecutors noted that in the same period, she gave a 40-minute speech to Goldman Sachs.
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Delaware Chancery Reaffirms: Caremark Liability Turns on Bad Faith, Not Bad Outcomes
Delaware corporate law demands neither omniscience nor infallibility from directors, but rather a good-faith effort. The Delaware Court of Chancery reaffirmed that principle yesterday in a decision dismissing claims that current and former directors of Boeing breached their oversight duty in connection with the January 2024 midair blowout of a Boeing jet’s door plug. In re The Boeing Co. Derivative Litig., C.A. No. 2024-1210-MTZ (Del. Ch. Aug. 13, 2026).
Following the 2018 and 2019 Boeing 737 MAX crashes that tragically claimed the lives of hundreds on board, Boeing overhauled its oversight of aircraft safety. Among other reforms, the board created an aerospace safety committee composed of independent directors with relevant expertise; the company formed a new safety organization that reported to the safety committee and Boeing’s chief engineer; and management presented on safety risks at each board meeting. Despite those efforts, in January 2024, a Boeing 737-9 MAX lost a cabin door plug in midair, leaving a hole in the aircraft and causing minor passenger injuries before landing safely. A group of Boeing stockholders brought a derivative lawsuit. Their Caremark claims—named for the 1996 Court of Chancery decision requiring directors to make a good-faith effort to implement and monitor a system for overseeing significant legal and compliance risks—alleged that the board ignored red flags of systemic manufacturing problems and set unsafe production targets.
The Court dismissed the claims. Caremark liability, it explained, cannot rest on mere negligence or even gross negligence. Rather, it requires disloyal bad faith—a conscious disregard of duty such that “directors must know that they were not discharging their fiduciary obligations.” Plaintiffs’ allegations fell short on every front, failing to support a rational inference that the directors acted in bad faith. Rejecting plaintiffs’ theory that nearly every update the board received about Boeing’s manufacturing risks amounted to an ignored red flag, the Court observed that they sought to “recast[] the volume and depth of Boeing’s reporting from a best practice into evidence of disloyalty.”
by wlrk.com
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👉 The plaintiffs' theory needed Boeing's post-MAX reforms to be real enough to prove the board had notice of manufacturing risk, and also thorough enough to prove the board then ignored the risk. The court found neither: the reports were too routine to count as a red flag, and too disconnected from the actual incident to count as a warning.
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Super Micro Clears Senior Management in Alleged Smuggling Scheme
Super Micro Computer SMCI -0.22%decrease; down pointing triangle completed its investigation into an alleged scheme from earlier this year, in which two employees and a contractor were said to have smuggled high-end Nvidia chips to China.
The server maker on Thursday said a team led by independent members of its board reviewed the transactions that were the subject of a federal indictment and didn’t find evidence that any current member of Super Micro’s senior management team had knowledge of the alleged diversion scheme, or of any actual diversion of restricted products.
The finding comes after Super Micro co-founder Yih-Shyan “Wally” Liaw resigned from the company in March, as he was one of the people indicted for his alleged role in the scheme.
The alleged scheme – which involved billions of dollars of servers and dummy devices used to deceive an American inspector – also resulted in Super Micro placing a second employee on leave and firing a contractor.
by WSJ.com: US Business
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👉 The board's investigation had a tough issue to resolve: determining whether an alleged scheme involving billions of dollars in diverted servers reached beyond its founder, an employee placed on leave, and a terminated contractor. That question is now DOJ's to address.
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Several Big Brokerages Leave Customer Accounts Open to Theft, Senators Say
Thieves use stolen information to open a brokerage account in your name. Soon after, your savings are siphoned from your real brokerage account into the fraudulent one — then the thieves vanish with your money.
Regulators have warned brokerages in recent years that this type of crime has been on the rise, but they haven’t required financial firms to adopt the strongest preventive measures, only suggesting that companies provide them. That has left many brokerage customers potentially vulnerable, depending on where they do business and what safeguards are offered.
Some large institutions, including Citi and Charles Schwab, do not allow customers to lock their brokerage accounts to protect themselves from these types of unauthorized transfers.
by NYT > Business
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👉 PSA: For anyone reading this with a Schwab or Citi brokerage account — ask whether you can lock it yourself, or whether that requires a phone call to customer service. The answer may say more about your protection than the size of the firm does.
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What Back-to-School Says About the Economy
Spending on K-12 and back-to-college combined is expected to hit a record of nearly $147 billion, according to the National Retail Federation. But in what may be a sign of the strains shoppers are under, they’re searching for cheaper goods and supplies. We’re still early in the season but we found this week that two of the nation’s biggest retailers, Walmart and Target, are racing to accommodate them.
“Customers are responding to just absolutely fantastic investments in price,” Walmart’s U.S. CEO David Guggina said yesterday during the company’s earnings call that highlighted the cost pressures facing consumers.
“We have a list of 14 key items that are priced less than what we saw in 2019,” he also said of the store’s school supplies, citing examples from the store’s Pen+Gear brand, which has crayons for 25 cents and No. 2 pencils for 92 cents. “And those prices are resonating with customers and we’re seeing it in traffic, ticket and unit volume all growing.”
by wsj.com
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👉 Watch for "record spending" and "trade-down" to show up in the same sentence across every retailer's Q3 earnings call. A same-store-sales number can look identical whether it came from more customers or lower prices, and right now, companies are leaning in on the second one.
