Former Nasdaq executive pleads guilty in insider-trading case
A former Nasdaq executive has pleaded guilty to securities fraud for using insider information that, regulators allege, helped him net $755,000 trading stocks on the exchange.
Donald Johnson admitted Thursday in a federal court in Virginia that he made trades on eight separate occasions from 2006 to 2009 using information he was given as part of his work for Nasdaq’s market-intelligence unit in New York.
“This case is the insider trading version of the fox guarding the henhouse,” Robert Khuzami, the director of enforcement at the Securities and Exchange Commission, said in a statement.
The SEC announced it was filing a civil suit against Johnson at the same time that Johnson pleaded guilty in court to one count of securities fraud. The SEC pegged Johnson’s gains from his illegal trades at $755,000.
Johnson retired from Nasdaq in 2009 and now lives in suburban Virginia. While he was with the company he worked as a managing director on a team that received confidential information from companies listed on Nasdaq’s stock exchange in order to provide the companies with analysis.
Among the stocks he traded were Central Garden & Pet Co., Digene Corp. and United Therapeutics Corp.
His biggest gain came in 2007, when he learned from executives at United Therapeutics that the company had successfully completed trials on a new blood pressure medication, Tyvaso. Johnson bought 10,000 shares in the company and then sold them after the trial results were publicly announced, earning $175,000, according to the Department of Justice.
The SEC’s complaint said Johnson placed the trades from his desk at work but used a brokerage account in his wife’s name in an effort to hide them. His wife, Dalila Lopez, was named as a defendant in the SEC’s suit.
Johnson, 56, could face a prison sentence of up to 20 years. He is set to be sentenced Aug. 12.
