A former software engineer with an online gambling company has been accused of insider trading and tipping in the stock of Toronto-based Score Media and Gaming Inc. ahead of its acquisition.

The U.S. Securities and Exchange Commission (SEC) charged David Roda, a former employee of U.S.-based Penn Interactive Ventures, with trading in Score Media ahead of its eventual acquisition for US$2 billion by Penn National Gaming, the parent company to Penn Interactive.

The SEC alleged that Roda had advance knowledge of the deal and purchased options in Score Media ahead of the transaction becoming public knowledge. It also alleged that he tipped a childhood friend to the forthcoming deal.

According to the SEC’s complaint, Score Media’s stock price soared by almost 80% when the deal was publicly announced, and Roda allegedly cashed in his holdings for a profit of US$560,762. His friend allegedly made US$5,602 in illicit trading profits.

“As we allege in our complaint, Roda was entrusted by his employer with critical, market-moving information, and he betrayed that trust by using the information to trade and also tip his friend so they could both profit,” said Scott Thompson, co-acting regional director of the SEC’s Philadelphia office, in a release. “When employees like Roda misappropriate and trade on confidential information, it erodes market confidence.”

The SEC said that Roda agreed to pay disgorgement, interest, and a penalty to be determined by a court at a later date.

Without admitting or denying the allegations, his friend agreed to pay more than US$11,000 in disgorgement and penalties. Both settlements are subject to court approval.

Roda was also criminally charged with insider trading by the U.S. attorney’s office for the Eastern District of Pennsylvania. That charge has not been proven.