Ex-Penn National Gaming employee indicted over insider trading claims

A former employee of Penn National Gaming’s (PNG) online division, Penn Interactive Ventures, has been charged by the Securities and Exchange Commission (SEC) over allegations of insider trading.

The charges relate to PNG’s $2bn acquisition of Canadian-headquartered media company theScore, a deal which completed in October 2021.

SEC investigators have named David Roda, who was given confidential information surrounding Penn’s interest in acquiring theScore prior to the deal, with provisions not to share that information or trade in shares of the business.

However, Roda breached this by purchasing 500 out-of-the-money call options on Score Media in the weeks and days leading up to the announcement of the acquisition.

In addition, Roda passed information on the deal to a longtime friend Andrew Larkin, who then purchased 375 shares in Score Media. Larkin has also been charged with insider trading by the SEC.

In the weeks following the public announcement of the deal, Penn National Gaming’s stock rose by almost 80%. At this point, Roda and Larkin sold their holdings for unlawful profits of $560,762 and $5,602, respectively.

The SEC has charged the pair with violations of anti-fraud provisions of US securities laws.

In order to be “permanently enjoined” from facing criminal charges, Roda has agreed to pay back the amount received, as well as any prejudgement interest on the funds plus a civil penalty to be agreed by the courts at a later date.

Larkin has also agreed to be permanently enjoined from criminal charges, conditional upon the payment of more than $11,000 in criminally obtained funds and penalties. In both cases, the penalties payable are subject to the approval of the courts.

The SEC’s investigation involved individuals from its Market Abuse Unit’s Analysis and Detection Centre, and was supervised by Philadelphia regional office investigator Scott A. Thompson.

It was also assisted by representatives from the Financial Industry Regulatory Authority (FIRA), the FBI and US Attorney’s Office for the Eastern District of Pennsylvania.

Speaking about the case, Thompson was unflinching in his assessment of Roda’s conduct.

“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,” Thompson said.

“When employees like Roda misappropriate and trade on confidential information, it erodes market confidence. The SEC remains committed to finding, investigating and charging those who engage in insider trading,” he added.

Special Agent in Charge of the FBI’s Philadelphia Division Jacqueline Maguire was similarly scathing.

“David Roda allegedly traded on material, non-public information and made out like a bandit,” she said.

“Insider trading like that is patently unfair to investors and a direct threat to the integrity of our financial markets.

“The FBI takes this crime seriously, and if you decide the risk of such illegal behavior is worth the potential reward, know that we will investigate and ensure you’re held accountable,” Maguire added.

In a parallel action, the US Attorney’s Office for the Eastern District of Pennsylvania today announced criminal charges against Roda.