A U.S. corporate executive who allegedly traded on inside information about his company’s deteriorating financial results — as his own job came under threat — has pled guilty to securities fraud.
A former executive at a publicly-traded tech company, Doximity, Paul Jorgensen, admitted to trading the company’s stock and options while in possession of material, non-public information about its financial performance.
According to court filings, in July 2022, while Jorgensen was the company’s chief revenue officer, he learned about some negative sales data ahead of its release — and, while he initially declined to trade on that information, after he was reassigned to a sales position at the company, he sold 61,162 shares that he secretly held in a personal brokerage account.
After the news was publicly reported, the company’s share price dropped 7% — so, by trading ahead of that event, Jorgensen avoided a US$300,000 drop in the value of his stock, U.S. authorities alleged.
In 2023, Jorgensen again traded ahead of more bad news for the company, including a round of forthcoming layoffs that resulted in his own termination — generating US$2.3 million in illicit profits from stock and options trading.
“Paul Jorgensen repeatedly used Doximity’s confidential information to trade in advance of the company’s quarterly earnings calls, earning himself more than US$2.5 million in illegal profits,” said Jay Clayton, U.S. attorney for the Southern District of New York, in a release.
Jorgensen, who pled guilty to two counts of securities fraud, is scheduled to be sentenced on May 21.