SEC Charges Credit Ratings Analyst and Two Friends With Insider Trading

The Securities and Exchange Commission today charged a credit ratings agency employee with tipping two friends about The Sherwin-Williams Co.’s confidential plans to acquire The Valspar Corp., which he learned of through his work. The SEC also charged the two friends with trading on the illicit tips, which reaped them substantial profits. According to the SEC’s complaint, Sebastian Pinto-Thomaz, an analyst in the credit ratings agency’s New York office, learned of the acquisition when Sherwin-Williams consulted the agency about the potential effect of the transaction on its credit rating. The SEC alleges that soon after, Pinto-Thomaz tipped his friends, who bought Valspar securities before the merger was announced.