Former Penn National Gaming employee agrees repayment deal on insider trading claims
Ex-employee who “made out like a bandit” in share trading over the $2bn theScore acquisition agrees settlement to avoid jail time
A former employee of Penn National Gaming’s (PNG), now PENN Entertainment, online division, Penn Interactive Ventures, has formally been ordered to repay profits made from insider trading of the firm’s shares as part of a deal to avoid jail time.
David Roda was arraigned by the US Department of Justice in June 2022 following a Securities and Exchange Commission (SEC) investigation into allegations surrounding insider trading.
At the time, FBI Philadelphia Division Special Agent in Charge Jacqueline Maguire claimed Roda manipulated the information and “made out like a bandit”.
Charges related to PNG’s $2bn acquisition of Canadian-headquartered media company theScore, a deal which completed in October 2021.
Roda was given confidential information surrounding Penn’s interest in acquiring theScore prior to the deal, with provisions not to divulge that information or trade in shares of the business.
However, he breached this by purchasing 500 out-of-the-money call options on Score Media Group, theScore’s parent company, 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 was charged with insider trading but agreed to pay back more than $11,000 in “criminally obtained” funds and penalties.
In the weeks following the public announcement of the deal, PNG’s stock rose by almost 80%, with Roda and Larkin selling their holdings for unlawful profits of $560,762 and $5,602, respectively.
In order to be “permanently enjoined” from facing criminal charges, Roda agreed to pay back the amount received, as well as any prejudgement interest on the funds and a civil penalty to be agreed by the courts at a later date.
The amount of this penalty has now been ratified by the US District Court for the Eastern District of Pennsylvania at $560,762, the full amount of the unlawful profits generated by Roda’s insider trading.
Roda is not the first individual to be caught on insider trading charges relating to PNG by US authorities, with the SEC indicting New York-based stockbroker Jordan Meadow and his friend Steven Teixeira on six charges of securities fraud relating to the theScore acquisition in June.
Meadow illegally obtained insider information from Teixeira’s former girlfriend, an employee of an investment bank providing support to PNG on the deal.
He would later use this information to purchase more than 769 call option contracts in Score Media Group between August 2 and August 3, 2021, also advising colleagues, a friend and his clients to purchase securities in the business.
Following the announcement of the deal on August 5, Meadow and other investors sold their call options for a combined profit of more than $5m. The pair are currently awaiting trial on these charges.