SEC Charges Ken Peterman, Former Comtech CEO, with Insider Trading in Advance of Negative Earnings Announcement

The Securities and Exchange Commission today announced insider trading charges against Ken Peterman, the former CEO, president, and Chair of the Board of Comtech Telecommunications Corp., in connection with his sale of Comtech shares on the basis of material non-public information about Comtech’s forthcoming negative quarterly earnings results. According to the SEC complaint, Peterman allegedly received a confidential presentation detailing Comtech’s forthcoming negative quarterly earnings results on March 4, 2024. He was allegedly informed that he was being terminated for cause eight days later, on March 12, 2024. The SEC’s complaint alleges that a few hours after he was terminated, and while subject to two different trading blackouts, Peterman placed an order to sell Comtech stock. On March 18, 2024, Comtech reported its negative quarterly earnings, which caused its stock price to drop more than 25 percent. The complaint alleges that Peterman avoided losses of about $12,445 by trading in advance of Comtech’s negative earnings announcement. Peterman allegedly directed his financial advisor to sell additional Comtech stock he held in a joint account, but the financial advisor was unable to complete the sale because of a trading blackout. Had the sale been completed, Peterman allegedly would have avoided additional losses of about $110,000. “There is no gray area when it comes to trading on the basis of material non-public information in breach of one’s fiduciary duty. C-suite executives like the defendant, a CEO with decades of experience, know that it is illegal to use their company’s confidential information for their own financial gain,” said Tejal D. Shah, Associate Director of the SEC’s New York Regional Office. “Our action today should serve as a strong deterrent to those executives who might think about going down the same path.” The complaint, filed in the U.S. District Court for the Eastern District of New York, charges Peterman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctive relief, disgorgement with prejudgment interest, civil penalties, and a bar preventing Peterman from serving as an officer or director of a public company. In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Peterman. The SEC’s investigation was conducted by Mary Kay Dunning, Jordan Baker, and Liora Sukhatme, and it was supervised by Ms. Shah, all of the New York Regional Office, with assistance from Leigh Barrett of the Office of Investigative and Market Analytics, and Heidi Verheggen and Kathryn Paige of the Division of Risk and Economic Analysis. The litigation will be managed by Travis Hill and Ms. Dunning and supervised by Preethi Krishnamurthy, all of the New York Regional Office. The SEC appreciates the assistance of the FBI and U.S. Attorney’s Office for the Eastern District of New York.

The Securities and Exchange Commission today announced insider trading charges against Ken Peterman, the former CEO, president, and Chair of the Board of Comtech Telecommunications Corp., in connection with his sale of Comtech shares on the basis of material non-public information about Comtech’s forthcoming negative quarterly earnings results. According to the SEC complaint, Peterman allegedly received a confidential presentation detailing Comtech’s forthcoming negative quarterly earnings results on March 4, 2024. He was allegedly informed that he was being terminated for cause eight days later, on March 12, 2024. The SEC’s complaint alleges that a few hours after he was terminated, and while subject to two different trading blackouts, Peterman placed an order to sell Comtech stock. On March 18, 2024, Comtech reported its negative quarterly earnings, which caused its stock price to drop more than 25 percent. The complaint alleges that Peterman avoided losses of about $12,445 by trading in advance of Comtech’s negative earnings announcement. Peterman allegedly directed his financial advisor to sell additional Comtech stock he held in a joint account, but the financial advisor was unable to complete the sale because of a trading blackout. Had the sale been completed, Peterman allegedly would have avoided additional losses of about $110,000. “There is no gray area when it comes to trading on the basis of material non-public information in breach of one’s fiduciary duty. C-suite executives like the defendant, a CEO with decades of experience, know that it is illegal to use their company’s confidential information for their own financial gain,” said Tejal D. Shah, Associate Director of the SEC’s New York Regional Office. “Our action today should serve as a strong deterrent to those executives who might think about going down the same path.” The complaint, filed in the U.S. District Court for the Eastern District of New York, charges Peterman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctive relief, disgorgement with prejudgment interest, civil penalties, and a bar preventing Peterman from serving as an officer or director of a public company. In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Peterman. The SEC’s investigation was conducted by Mary Kay Dunning, Jordan Baker, and Liora Sukhatme, and it was supervised by Ms. Shah, all of the New York Regional Office, with assistance from Leigh Barrett of the Office of Investigative and Market Analytics, and Heidi Verheggen and Kathryn Paige of the Division of Risk and Economic Analysis. The litigation will be managed by Travis Hill and Ms. Dunning and supervised by Preethi Krishnamurthy, all of the New York Regional Office. The SEC appreciates the assistance of the FBI and U.S. Attorney’s Office for the Eastern District of New York.