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How an Eavesdropping Boyfriend Made A Mint on the Virgin America Merger

How an Eavesdropping Boyfriend Made A Mint on the Virgin America Merger
How an Eavesdropping Boyfriend Made A Mint on the Virgin America Merger

A New York City accountant agreed to pay the Securities and Exchange Commission more than a half-million dollars to settle insider trading charges related to the merger of Alaska Airlines and Virgin America. Peter Cho was accused of listening in on his investment banker wife’s phone calls to glean sensitive information, allowing him to earn over $250K through a series of perfectly timed investments.

Accountant Peter Cho’s windfall returns from investments related to the merger of Alaska Airlines and Virgin America, turned into heavy losses when the U.S. Security Exchange and Commission (SEC) accused him of insider trading. Officials say the well-connected investor listened in on his wife’s phone calls to gain insider information on details of the upcoming merger. Cho reportedly made upwards of $250,000 through the knowledge he gained by eavesdropping on his then girlfriend, who was at the time an investment broker working on the merger.

Cho’s wife was not accused of breaking confidences and was not alleged to have taken part in any wrongdoing. Her employer, likewise, cleared her of any misconduct.

“UBS takes client confidentiality extremely seriously and fully cooperated with this investigation,” the firm’s spokesperson said in a statement to reporters. “After our own review, we agree with the complaint that our employee was not involved in the alleged trading activity.”

In filings obtained by Business insider, however, officials say Peter Cho “owed a duty of trust or confidence” to his then fiancée “based on their relationship which included a history, pattern, and practice of sharing confidences.” Cho shared a one-bedroom Manhattan apartment with his fiancée at the time he is accused of listening in on confidential financial discussions. It is not believed that the couple ever discussed the merger directly.

Cho allegedly used the information he gleaned through listening in on on his wife to invest heavily in Virgin call options. According to the SEC, on a number of days leading up to the eventual merger announcement, Cho was responsible for the entirety of all transactions involving Virgin stock.

Though Cho did not admit to any misconduct, he agreed to pay the penalty of $532,777. SEC officials said that because of his background in financial planning, the accountant should have been aware that his alleged actions were a violation of insider trading and antifraud regulations.

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