Wells Fargo Reports Quarterly Earnings Rise 13 PercentTwo Wells Fargo employees were charged by the Securities and Exchange Commission (SEC) for their involvement in an alleged profiting scheme set to buy and short sell stock before research analyst reports confirmed ratings changes.

Research analysts provide recommendations and ratings with reports on stocks and other security they’ve reviewed. When analysts change previous reviews on prospects of a security, a report with ratings changes is released. The SEC contends that while Gregory T. Bolan Jr. was at Wells Fargo working as a research analyst, he tipped a trader at the firm, Joseph C. Ruggieri, in advance of several market-moving ratings upgrades or downgrades he made in specific securities. The tips brought $117,000 in profits for Ruggieri.

“Instead of abiding by firm policies that specifically prohibited trading ahead of published research, Ruggieri used information obtained from Bolan to make profitable trades in advance of six separate research reports,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office.  “The repeated nature of these violations demonstrates an utter disregard for our insider trading laws.”

Bolan is also suspected of tipping a close friend with nonpublic information regarded some of his future ratings changes. The friend, who recently passed away, benefitted from profits nearing $10,000 in a personal brokerage account by placing trades ahead of three ratings changes. “Bolan gave two traders a sneak preview into his upcoming ratings changes and provided them an unfair and illegal advantage on the rest of the markets,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit.

Upon receiving trade tips, Ruggieri preceded to allegedly purchase the company’s relevant stocks or sell the stock short ahead of Bolan’s downgrades. Between April 2010 and March 2011, Bolan released eight research reports with ratings changes or initiations of coverage with “underperform” or “overperform” ratings. Ruggieri profited by trading ahead of six of these reports in an unfamiliar trading pattern. Only a small handful of Ruggieri’s overnight positions in securities were rated within the six months prior to his trading.

After participating in the misconduct reported by the SEC investigation, Bolan and Ruggieri violated Section 17(a) of the Securities Act of 1933, along with Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5. An administrative proceeding will determine actions to be taken regarding disgorgement of ill-gotten gains, prejudgment interest, financial penalties, and other remedial measures.

crimesceneA former data analyst for the Central Intelligence Agency (CIA) was arrested last week for allegedly attempting to crash a political event hosted by Army General David Petraeus, who coincidentally was a former CIA director.

Police say 75-year-old Ray McGovern, was arrested and charged with misdemeanor criminal trespass and misdemeanor resisting arrest while attempting to gain entry to an event held on the Upper East Side’s 92nd St. Y. The incident occurred on Thursday night, with McGovern spending one night in jail before posting bail the following day.

Here’s the kicker, though: McGovern told news reporters that he purchased a $45 ticket to attend the event. Nonetheless, guards on site prevented the former CIA analyst from entering the premises, allegedly telling McGovern that he was “not welcome here.” Video footage obtained from witnesses shows police twisting McGovern’s arm behind his back as McGovern screams in pain. There’s also blood visible on McGovern’s pants during the video.

So, why was McGovern trying to attend the event in the first place? Reports suggest that he was going to grill General Petraeus on a number of different topics, one of which was his questioning of former Defense Secretary Donald Rumsfeld in 2006 — more specifically, the way in which Petraeus made false statements about Iraqi possessing weapons of mass destruction and its ties with the terrorist organization Al-Queda. McGovern added that he wanted to ask Petraeus if he was willing to come out of retirement to retrain the Iraqi army, perhaps doing the job better this time around.

McGovern wrote the following regarding Petraeus and the CIA’s position in Iraq and Afghanistan back in 2010:

What if CIA analysts assess(ed)” his Iraq and Afghanistan performance as failure? Would he accept or punish critical analysis? The Petraeus appointment also suggests that the President places little value on getting the straight scoop on these key war-related issues. If he did want the kind of intelligence analysis that, at times, could challenge the military, why is he giving the CIA job to a general with a huge incentive to gild the lily regarding the ‘progress’ made under his command?

After University cops arrested McGovern, the former CIA analyst was transferred to the police station at 100 Center Street ahead of arraignment. He remained here for the night, posting bail the following morning. No details have been released regarding his court date.