A federal court entered a final judgment Friday against Robert Brian Thompson, a former Federal Reserve Bank of Richmond senior supervisor and examiner, concluding the Securities and Exchange Commission’s insider trading case against him.
Under the final consent judgment issued Friday by the U.S. District Court for the Eastern District of Virginia Thompson agreed to pay $584,873 in disgorgement and $67,750 in prejudgment interest. The payment was satisfied by a forfeiture order in a parallel criminal case, where Thompson pleaded guilty to insider trading and making false statements and was sentenced to two years in prison, according to the SEC.
The SEC filed its complaint in November, charging Thompson with violating anti-fraud provisions. In December, the court entered a bifurcated consent judgment enjoining Thompson from violating the provisions.
The SEC’s lawsuit identified the two banks whose stocks Thompson reportedly traded as New York Community Bank and Capital One.
In October 2023, Thompson obtained advance knowledge of a positive earnings announcement from a bank under his supervision – reportedly Capital One – and purchased $678,000 worth of the bank's stock hours before the public announcement, the SEC alleged.
In January 2024, Thompson learned that another bank, presumably NYCB, in his portfolio would be disclosing unexpected loan losses worth hundreds of millions of dollars. He used this nonpublic information to purchase thousands of put options on the bank's stock two days before the announcement, the SEC said.
The illegal trades resulted in Thompson obtaining $584,873 in illicit profits, according to the SEC complaint.
Thompson made roughly $771,678 in personal profits over trades made between October 2020 and February 2024, the Justice Department said in November.
The final order restricts Thompson from using any means of interstate commerce, mail services, or national securities exchange facilities to commit securities fraud. Additionally, he is prohibited from employing fraudulent schemes or devices in connection with securities transactions, making false statements or omissions of material facts that would mislead others in such transactions, or engaging in any deceptive practices that would operate as fraud upon any person in securities transactions.
Some specific insider trading prohibitions include trading on inside information, such as buying or selling securities based on material nonpublic information while breaching a fiduciary duty or duty of trust. Thompson is also forbidden from tipping, which includes communicating material non-public information about securities or issuers to others for trading purposes while breaching a fiduciary duty or duty of trust.
In April, the Richmond Fed barred Thompson from the banking industry. However, the Richmond Fed noted that an exemption might be granted in writing independently by the Federal Deposit Insurance Corp., the Federal Reserve Board, and the National Credit Union Administration board.
If Thompson fails to adhere to the requirements of the Fed prohibition order, he could face fines of up to $1 million or a maximum of five years in prison.
