(CN) – The Securities and Exchange Commission claims the former head of a New Jersey payment processing firm gave his girlfriend $1 million to buy company stock ahead of a merger announcement, netting the pair more than $250,000 in profits.
According to the SEC’s lawsuit filed Tuesday in Connecticut federal court, Robert Carr, former CEO of Heartland Payment Systems Inc., tipped off his longtime romantic partner Heather Hanratty about a planned acquisition of the company by Global Payments Inc.
Just before the merger announcement, Carr, 73, allegedly gave Hanratty, 65, a check for $1 million in November 2015 and told her to open a brokerage account to buy $900,000 worth of Heartland stock.
“Hanratty acquired the Heartland securities as instructed by Carr, completing the purchases of Heartland stock weeks prior to the news of the acquisition of Heartland by Global became public in December 2015,” the complaint states. “The acquisition of Heartland by Global caused Heartland’s stock price to significantly increase, and Hanratty eventually sold the stock for a profit of over $250,000.”
Carr, of New Hampshire, and Hanratty, a Connecticut resident, are both charged with violating Section 10(b) of the Securities Exchange Act. They have been romantically involved since 2011, according to the lawsuit.
The SEC seeks disgorgement of ill-gotten profits and civil penalties against the couple. It also wants a court order barring Carr from serving as a corporate officer or director of any company overseen by the agency.
Carr’s attorney, Michael McGovern, said in a statement that “we have brought to the government’s attention exculpatory information regarding the legal advice Mr. Carr received directly from Heartland’s general counsel at the time these events were occurring.”
“We are continuing to discuss this matter with the SEC, and we remain confident that this matter will be resolved favorably,” McGovern said.