Finance

Attorney Indicted On Insider Trading Offers Emoji Defense

That's one enigmatic emoji.

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Emoji yellow smiley face with dollar symbol eyesDavid Sargent, an attorney and faculty member at Loyola University Chicago’s School of Environmental Sustainability, was indicted on insider trading charges. There is also a parallel lawsuit filed by the U.S. Securities and Exchange Commission. Prosecutors believe Sargent used nonpublic information to earn ~$110,000 in Chegg Inc. stock sales based on details they say he learned from college friend and  Chegg manager, Christopher Klundt.

As reported by Reuters, Sargent and Klundt founded StudyBlue together in college. Though Sargent left the company, Klundt stayed and StudyBlue was bought by Chegg in 2018. The SEC alleges that relationship was the source of the nonpublic information:

Prosecutors said that in May 2020 Klundt attended a Chegg pre-earnings discussion, where he was told the company would be reporting strong earnings.

Klundt called Sargent, who immediately bought nearly 300 shares of Chegg stock and Chegg call options, spending more than $41,000, according to the SEC. Sargent made more than $100,000 a few days later, after Chegg publicly announced its first quarter earnings had increased by 35% over the previous year, according to the SEC’s complaint.

Klundt texted Sargent an emoji smiley face with dollar signs for eyes after the announcement, according to the SEC.

Sargent’s attorney, James Kopecky of Kopecky Schumacher Rosenburg, denies his client did anything wrong saying, “What they have is an emoji, not a case.”

Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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