SEC v. ROBERT BRIAN THOMPSON, No. 3:24-cv-00800-MHL, Eastern District of Virginia (Nov. 19, 2024) — Complaint

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-against-
ROBERT BRIAN THOMPSON,
Defendant.
Case No. ____________
JURY TRIAL DEMANDED
COMPLAINT
Plaintiff Securities and Exchange Commission (the “Commission”), for its Complaint
against Defendant Robert Brian Thompson (“Thompson”), alleges as follows:
SUMMARY
1.From at least October 2023 through January 2024 (the “Relevant Period”),
Thompson, then a senior banking supervisor and examiner at the Federal Reserve Bank of
Richmond (the “Federal Reserve Bank”), unlawfully traded in stocks and options of at least two
banks that were under his supervisory purview based on inside information.
2.As a senior employee at the Federal Reserve Bank – one of twelve regional
Federal Reserve banks that supervise and regulate the U.S. banking system under the oversight
of the Board of Governors of the Federal Reserve System (collectively, the “Federal Reserve”) –
Thompson had regular access to material nonpublic information about numerous publicly-traded
banks, including unreleased earnings data; capital, liquidity, and risk levels; and records of bank
examinations, stress tests, and other regulatory events. For that reason, the Federal Reserve’s
policies and procedures required Thompson to keep confidential (and not use for any non-official
purposes) all nonpublic information obtained through his work.
3:24cv800

2
3.In addition, a federal regulation prohibited Thompson from trading in bank
securities altogether, given the conflict of interest such trading would create with his supervisory
and regulatory responsibilities.
4.Nevertheless, during the Relevant Period, Thompson used material nonpublic
information that he obtained through his work at the Federal Reserve Bank to trade in stock and
options of at least two publicly-traded banks within his supervisory portfolio – New York
Community Bancorp, Inc. (“NYCB”) and Capital One Financial Corporation (“Capital One”).
5.Thompson attempted to evade scrutiny for his unlawful trading by submitting
false certifications to the Federal Reserve. Thompson’s certifications falsely represented that he
had no bank securities holdings and had not engaged in any trading prohibited by law or Federal
Reserve policy, which he knew was untrue.
6.Thompson placed each of his unlawful trades on the basis of material nonpublic
information he received from his job about the relevant bank’s upcoming earnings announcement
or other disclosure that Thompson knew or believed would cause the stock price to move in a
direction favorable to his stock or options position.
7.In placing each of those trades, Thompson knew or at least recklessly disregarded
that he was trading based on information that was material and nonpublic and that using the
information to enrich himself through trading was a breach of his duties as a Federal Reserve
Bank employee.
8.Through his unlawful trades, Thompson obtained ill-gotten profits of at least
$584,873.

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VIOLATIONS
9.By virtue of the conduct alleged herein, Thompson violated Section 10(b) of the
Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
10.    Unless Thompson is restrained and enjoined, he will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
11.    The Commission brings this action pursuant to the authority conferred upon it by
Exchange Act Sections 21(d) and 21A [15 U.S.C. §§ 78u(d) and 78u-1].
12.    The Commission seeks a final judgment: (a) permanently enjoining Thompson
from violating the federal securities laws and rules this Complaint alleges he violated; (b)
ordering Thompson to disgorge all ill-gotten gains he received as a result of the violations
alleged herein and to pay prejudgment interest thereon pursuant to Exchange Act Sections
21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]; (c) ordering
Thompson to pay civil money penalties pursuant to Exchange Act Section 21A [15 U.S.C. § 78u-
1]; and (d) ordering any other relief the Court may deem just and proper.
JURISDICTION AND VENUE
13.    This Court has jurisdiction over this action pursuant to Sections 21, 21A, and 27
of the Exchange Act [15 U.S.C. §§ 78u, 78u-1, and 78aa].

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14.    Thompson, directly and indirectly, has made use of the means or instrumentalities
of interstate commerce or of the mails in connection with the transactions, acts, practices, and
courses of business alleged herein.
15.    Venue in this District is proper under Section 27 of the Exchange Act [15 U.S.C.
§ 78aa]. Defendant may be found in, is an inhabitant of, and transacts business in the Eastern
District of Virginia, and certain of the acts, practices, transactions, and courses of business
constituting the violations alleged in this Complaint occurred in this District, including
Thompson’s misappropriation of material nonpublic information concerning certain bank issuers
from his employer (located in this District) and placing or directing trades on the basis of that
material nonpublic information.
DEFENDANT
16.    Thompson, age 43, is a resident of Moseley, Virginia. From 2004 through
approximately May 2024, Thompson was employed at the Federal Reserve Bank in various
banking regulatory, supervisory, and examination functions.
OTHER RELEVANT ENTITIES
17.    The Federal Reserve Bank is one of the twelve regional Federal Reserve banks
that supervise and regulate the U.S. banking system under the Federal Reserve’s oversight.
18.    NYCB is a Delaware corporation headquartered in Hicksville, New York. NYCB
is a bank holding company subject to supervision, examination, and regulation by the Federal
Reserve. NYCB’s common stock is registered with the Commission pursuant to Section 12(b) of
the Exchange Act and trades on the New York Stock Exchange under the ticker symbol

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“NYCB.” NYCB files periodic reports, including Forms 10-K and 10-Q, with the Commission
pursuant to Section 13(a) of the Exchange Act and related rules thereunder.
19.    Capital One is a Delaware corporation headquartered in McLean, Virginia.
Capital One is a bank holding company subject to supervision, examination, and regulation by
the Federal Reserve. Capital One’s common stock is registered with the Commission pursuant to
Section 12(b) of the Exchange Act and trades on the New York Stock Exchange under the ticker
symbol “COF.” Capital One files periodic reports, including Forms 10-K and 10-Q, with the
Commission pursuant to Section 13(a) of the Exchange Act and related rules thereunder.
FACTS
I.BACKGROUND
A.Through His Work at the Federal Reserve Bank, Thompson Had Regular Access
to Material Nonpublic Information about Publicly-Traded Banks.
20.    From 2022 through approximately May 2024, Thompson served as Deputy
Central Point of Contact for Large & Foreign Banking Organizations at the Federal Reserve
Bank.
21.    In that role, Thompson managed a team whose primary responsibility was to
supervise and conduct examinations of Large Banking Organizations – U.S. banking firms with
total assets of at least $100 billion but excluding the eight largest U.S.-based, global,
systemically-important banks.
22.    In his day-to-day work, Thompson regularly received, reviewed, communicated,
and otherwise had access to highly confidential and sensitive information (including material
nonpublic information) about all 18 institutions within the Large Banking Organizations
portfolio, which included NYCB and Capital One.

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23.    Thompson could access this information in various ways, including through
systems and databases available to Federal Reserve staff (but not the public) and through
communications with other Federal Reserve personnel.
B.Thompson Controlled Brokerage Accounts in His and/or His Wife’s Names.
24.    During the Relevant Period, Thompson and his wife held several trading and
brokerage accounts (the “Thompson Accounts”).
25.    Thompson had full trading authority over all the Thompson Accounts.
26.    Thompson conducted all trading in the Thompson Accounts during the Relevant
Period.
C.Thompson Was Prohibited from Trading in Bank Securities and from Disclosing
or Trading on Material Nonpublic Information Obtained Through his
Employment, and He Submitted a False Certification on That Topic.
27.    During the Relevant Period, Thompson was subject to the Federal Reserve Bank’s
Code of Conduct, which included the following directives (emphases added):
[Federal Reserve Bank] examination and other bank or bank holding
company supervisory information is the property of the Board of Governors
of the Federal Reserve System (‘Board’) and may be disclosed only in
accordance with Board procedures.
...
In the course of working at the [Federal Reserve Bank], an employee may
have  access  to  non-public  information.  Non-public  information  is
information that the employee knows, or reasonably should know: (a) has
not been made available to the general public; (b) is designated as
confidential, private or proprietary; or (c) is routinely treated by the [Federal
Reserve Bank] as confidential ... An employee must strictly preserve the
confidentiality of such information. It can be disclosed only as required for
[Federal Reserve Bank] purposes and only as authorized.
...
An employee is prohibited from using non-public information for any
purpose other than [Federal Reserve Bank] business. In addition, an
employee may not engage, directly or indirectly, in any financial
transaction as a result of, or in reliance on, non-public information,
whether such information relates to the [Federal Reserve Bank] or any

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other person or institution. An employee may not allow the improper
use of such non-public information to further the employee’s own
private interest or that of another person....
28.    A federal regulation, 5 C.F.R. § 6801.103, also prohibited Thompson from trading
in bank securities altogether (subject to certain exceptions not applicable here) – irrespective of
any material nonpublic information – because of his role as an employee of a bank regulator.
That regulation provided, “Prohibited interests: Except as permitted by this section, an employee
[of the Federal Reserve], or an employee’s spouse or minor child, shall not own or control,
directly or indirectly, any debt or equity interest in... [a] depository institution or any of its
affiliates.”
29.    Each year, Thompson was required to complete an annual certification form
acknowledging the trading restrictions and disclosing, among other things, any bank securities
holdings as well as any actual or apparent conflicts of interest or violations of law or Federal
Reserve policy.
30.    On approximately August 9, 2023, Thompson submitted his required annual
certification form for fiscal year 2023.
31.    In this form, Thompson reported that he held no bank securities, had no actual or
apparent conflicts of interest, and had committed no violations of law or Federal Reserve policy.
32.    In reality, as of the date of his certification, Thompson held bank stock and
options with a market value exceeding $500,000 in the Thompson Accounts, none of which he
reported.
33.    In addition, Thompson failed to report that he opened and closed stock or options
positions in several bank issuers earlier in the year in transactions that were prohibited and that
created actual or apparent conflicts of interest with his supervisory responsibilities.

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II.    THOMPSON MISAPPROPRIATED MATERIAL NONPUBLIC INFORMATION
FROM THE FEDERAL RESERVE BANK AND USED IT TO TRADE BANK
STOCKS AND OPTIONS.
A.Thompson Knowingly Traded in Capital One Stock Based on Material
Nonpublic Information He Received Through His Work.
34.    On October 11, 2023, Thompson received an email from a Federal Reserve
colleague attaching a “preview” of Capital One’s third quarter 2023 earnings, showing earnings
per share (“EPS”) significantly exceeding market analysts’ estimates – a positive result.
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35.    The email and its attachment were replete with material nonpublic information
collected or prepared by Federal Reserve staff in connection with its supervision of Capital One.
36.    On October 26, 2023, just hours before Capital One was scheduled to release its
earnings for the third quarter to the public, Thompson purchased 7,500 Capital One shares in the
Thompson Accounts at a total cost of $678,000 – or an average price of $90.40 per share.
37.    When the market closed on October 26, 2023, Capital One’s stock traded at
$89.51 per share.
38.    After the market closed, Capital One publicly announced its third quarter
earnings, and the numbers were substantially similar or identical to the positive results reflected
in the earnings “preview” Thompson received two weeks earlier.
39.    As a result of Capital One’s positive earnings announcement, the company’s stock
price rose the next day, October 27, 2023. When the market closed, Capital One’s stock traded
at $97.74 per share, an increase of 9.19% from the previous day’s closing price.
1
EPS measures the monetary value of a corporation’s net earnings per outstanding share of
common stock in a given period, and is a key measure of corporate profitability. Financial
analysts that track a company’s performance often publish estimates of the company’s EPS to
help investors predict how the company will ultimately perform during the period. When a
company’s EPS exceed analysts’ estimates, the company’s stock price typically reacts favorably.
In contrast, when a company’s EPS for a given period fall below analysts’ previously published
estimates, the stock price often drops as a result.

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40.    Thompson sold his Capital One stock at an average price of $100.98 per share,
realizing ill-gotten profits of approximately $79,346.
B.Thompson Knowingly Traded in NYCB Options Based on Material Nonpublic
Information He Received Through His Work.
41.    Between January 18 and January 26, 2024, Thompson learned, via work-related
communications with other Federal Reserve staff, that NYCB would soon be announcing
substantial, unexpected losses related to loans it acquired as part of its March 2023 acquisition of
a distressed bank, Signature Bank N.A. (“Signature Bank”).
42.    During this period, Thompson exchanged a series of emails and instant messages
with Federal Reserve colleagues in which they discussed NYCB’s upcoming year-end earnings
release (scheduled for January 31, 2024) and what the disclosure of the loan losses might mean
for NYCB’s stock price and the financial results of other banks with similar risk profiles.
43.    For example, on January 18, 2024, Thompson electronically messaged a Federal
Reserve colleague, whose supervisory work at that time was focused on NYCB, and wrote “well
i know you said earning[s] will be bad,” and speculated about how the news would impact
NYCB’s stock price once it was disclosed. The next week, on Friday, January 26, 2024,
Thompson messaged the same colleague and noted that “NYCB might be ok.”
44.    On the morning of Monday, January 29, 2024, at approximately 9:56 a.m.,
Thompson messaged a different colleague asking for a “sneak peek at whatever the issue is
[with] NYCB so I can get a head start on [another bank’s] exposure that we know is coming.”
2
The other bank Thompson referred to was another bank in the Large Banking Organizations
portfolio that acquired a different distressed institution in March 2023 under circumstances
similar to NYCB’s acquisition of Signature Bank that same month.
2
All times set forth herein are in Eastern Time.

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45.    Less than two hours after emailing his colleague, on January 29, 2024, between
approximately 11:13 a.m. and 11:38 a.m., Thompson purchased a total of 1,600 out-of-the-
money put option contracts with an expiration date of February 16, 2024 – contracts that would
allow Thompson to make money if NYCB’s stock price fell by the February 16 expiration date –
in the Thompson Accounts at a total cost of approximately $14,495.
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46.    Thompson’s January 29 NYCB put option purchases accounted for more than
99% of the total trading volume in those put options on his purchase date.
47.    The next day, on January 30, 2024, NYCB’s stock traded at a price of $31.14 per
share when the market closed.
48.    On Wednesday, January 31, 2024, before the market opened, NYCB publicly
announced its 2023 fiscal year-end earnings results, with EPS coming in significantly below
market analysts’ estimates – a negative result driven by hundreds of millions of dollars’ worth of
previously-undisclosed loan losses related to NYCB’s Signature Bank acquisition.
49.    Later that day, at approximately 4:40 p.m., Thompson sent an email to several
Federal Reserve colleagues in which he acknowledged that he had known the week before that
NYCB would be announcing bad news: “Last week, [my team] caught wind of a potential credit
issues (sic) at NYCB and began to monitor and prepare for the earnings release today.”
50.    By the close of trading that day, NYCB shares traded at $19.41 per share – a price
37% lower than the stock’s closing price the previous day.
3
A put option contract gives its buyer the right, but not the obligation, to sell 100 shares of
the underlying stock at a specified price (the “strike price”) on or before the expiration date in
exchange for paying a premium up front. Generally, the buyer of a put option expects that the
price of the underlying stock will fall on or before the expiration date, allowing the buyer to
profit by acquiring the stock at market price and selling it at the higher strike price.

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51.    The next day, Thursday, February 1, 2024, Thompson sold his NYCB put options
and obtained ill-gotten profits of approximately $505,527 – representing a return of
approximately 3,745.2% in less than a week.
III.   THOMPSON AGAIN FALSELY CERTIFIED IN REQUIRED DISCLOSURE
FORMS THAT HE HELD NO BANK SECURITIES AND ENGAGED IN NO
PROHIBITED TRADING.
52.    During the Relevant Period, the Federal Reserve required that employees
promptly report any changes to their annual certification forms concerning securities holdings in
banks, potential conflicts of interest, and other matters.
53.    On or about March 12, 2024, Thompson submitted an amended certification form
for 2023 in which he reported a potential conflict of interest arising out of discussions he was
having with Capital One about potential employment at the bank.
54.    Once again, Thompson reported no bank securities holdings and no actual or
apparent conflicts or violations related to trading, despite having opened and closed stock or
options positions in several bank issuers (including NYCB and Capital One) in prohibited,
conflict-creating trades, based on material nonpublic information, since the date of his previous
August 2023 certification.
FIRST CLAIM FOR RELIEF
Violation of Exchange Act Section 10(b) and Rule 10b-5 Thereunder
55.    The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 54.
56.    Thompson, directly or indirectly, in connection with the purchase or sale of
securities and by the use of means or instrumentalities of interstate commerce, or the mails, or
the facilities of a national securities exchange, knowingly or recklessly (i) employed one or more
devices, schemes, or artifices to defraud, (ii) made one or more untrue statements of a material

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fact or omitted to state one or more material facts necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading, and/or
(iii) engaged in one or more acts, practices, or courses of business which operated or would
operate as a fraud or deceit upon other persons.
57.    By reason of the foregoing, Thompson, directly or indirectly, violated and, unless
enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Thompson from violating, directly or indirectly, Section 10(b) of
the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
II.
Ordering Thompson to disgorge all ill-gotten gains he received directly or indirectly, with
prejudgment interest thereon, as a result of the alleged violations pursuant to Exchange Act
Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)];
III.
Ordering Thompson to pay civil monetary penalties under Section 21A of the Exchange
Act [15 U.S.C. § 78u-1]; and
IV.
Granting any other and further relief this Court may deem just and proper.

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DEMAND FOR JURY TRIAL
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission demands
trial by jury in this action of all issues so triable.
Dated: November 8, 2024
Respectfully submitted,
/s/ Timothy K. Halloran
Timothy K. Halloran (VSB No. 48352)
U.S. SECURITIES AND EXCHANGE COMMISSION
100 F Street, N.E.
Washington, D.C. 20549
Tel: (202) 551-4414 (Halloran)
Email: [email protected]
Joseph G. Sansone*
Lindsay S. Moilanen*
Derek M. Schoenmann*
David Bennett*
U.S. SECURITIES AND EXCHANGE COMMISSION
100 Pearl Street, Suite 20-100
New York, NY 10004-2616
Tel: (212) 336-9113 (Schoenmann)
Email: [email protected]
*Appearing pursuant to Local Civil Rule 83.1(D)(2)
Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

-against-

ROBERT BRIAN THOMPSON,

Defendant.

Case No. ____________

JURY TRIAL DEMANDED

COMPLAINT

Plaintiff Securities and Exchange Commission (the “Commission”), for its Complaint

against Defendant Robert Brian Thompson (“Thompson”), alleges as follows:

SUMMARY

1. From at least October 2023 through January 2024 (the “Relevant Period”),

Thompson, then a senior banking supervisor and examiner at the Federal Reserve Bank of

Richmond (the “Federal Reserve Bank”), unlawfully traded in stocks and options of at least two

banks that were under his supervisory purview based on inside information.

2. As a senior employee at the Federal Reserve Bank – one of twelve regional

Federal Reserve banks that supervise and regulate the U.S. banking system under the oversight

of the Board of Governors of the Federal Reserve System (collectively, the “Federal Reserve”) –

Thompson had regular access to material nonpublic information about numerous publicly-traded

banks, including unreleased earnings data; capital, liquidity, and risk levels; and records of bank

examinations, stress tests, and other regulatory events. For that reason, the Federal Reserve’s

policies and procedures required Thompson to keep confidential (and not use for any non-official

purposes) all nonpublic information obtained through his work.

3:24cv800

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3. In addition, a federal regulation prohibited Thompson from trading in bank

securities altogether, given the conflict of interest such trading would create with his supervisory

and regulatory responsibilities.

4. Nevertheless, during the Relevant Period, Thompson used material nonpublic

information that he obtained through his work at the Federal Reserve Bank to trade in stock and

options of at least two publicly-traded banks within his supervisory portfolio – New York

Community Bancorp, Inc. (“NYCB”) and Capital One Financial Corporation (“Capital One”).

5. Thompson attempted to evade scrutiny for his unlawful trading by submitting

false certifications to the Federal Reserve. Thompson’s certifications falsely represented that he

had no bank securities holdings and had not engaged in any trading prohibited by law or Federal

Reserve policy, which he knew was untrue.

6. Thompson placed each of his unlawful trades on the basis of material nonpublic

information he received from his job about the relevant bank’s upcoming earnings announcement

or other disclosure that Thompson knew or believed would cause the stock price to move in a

direction favorable to his stock or options position.

7. In placing each of those trades, Thompson knew or at least recklessly disregarded

that he was trading based on information that was material and nonpublic and that using the

information to enrich himself through trading was a breach of his duties as a Federal Reserve

Bank employee.

8. Through his unlawful trades, Thompson obtained ill-gotten profits of at least

$584,873.

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VIOLATIONS

9. By virtue of the conduct alleged herein, Thompson violated Section 10(b) of the

Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5

thereunder [17 C.F.R. § 240.10b-5].

10. Unless Thompson is restrained and enjoined, he will engage in the acts, practices,

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,

and courses of business of similar type and object.

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT

11. The Commission brings this action pursuant to the authority conferred upon it by

Exchange Act Sections 21(d) and 21A [15 U.S.C. §§ 78u(d) and 78u-1].

12. The Commission seeks a final judgment: (a) permanently enjoining Thompson

from violating the federal securities laws and rules this Complaint alleges he violated; (b)

ordering Thompson to disgorge all ill-gotten gains he received as a result of the violations

alleged herein and to pay prejudgment interest thereon pursuant to Exchange Act Sections

21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]; (c) ordering

Thompson to pay civil money penalties pursuant to Exchange Act Section 21A [15 U.S.C. § 78u-

1]; and (d) ordering any other relief the Court may deem just and proper.

JURISDICTION AND VENUE

13. This Court has jurisdiction over this action pursuant to Sections 21, 21A, and 27

of the Exchange Act [15 U.S.C. §§ 78u, 78u-1, and 78aa].

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14. Thompson, directly and indirectly, has made use of the means or instrumentalities

of interstate commerce or of the mails in connection with the transactions, acts, practices, and

courses of business alleged herein.

15. Venue in this District is proper under Section 27 of the Exchange Act [15 U.S.C.

§ 78aa]. Defendant may be found in, is an inhabitant of, and transacts business in the Eastern

District of Virginia, and certain of the acts, practices, transactions, and courses of business

constituting the violations alleged in this Complaint occurred in this District, including

Thompson’s misappropriation of material nonpublic information concerning certain bank issuers

from his employer (located in this District) and placing or directing trades on the basis of that

material nonpublic information.

DEFENDANT

16. Thompson, age 43, is a resident of Moseley, Virginia. From 2004 through

approximately May 2024, Thompson was employed at the Federal Reserve Bank in various

banking regulatory, supervisory, and examination functions.

OTHER RELEVANT ENTITIES

17. The Federal Reserve Bank is one of the twelve regional Federal Reserve banks

that supervise and regulate the U.S. banking system under the Federal Reserve’s oversight.

18. NYCB is a Delaware corporation headquartered in Hicksville, New York. NYCB

is a bank holding company subject to supervision, examination, and regulation by the Federal

Reserve. NYCB’s common stock is registered with the Commission pursuant to Section 12(b) of

the Exchange Act and trades on the New York Stock Exchange under the ticker symbol

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“NYCB.” NYCB files periodic reports, including Forms 10-K and 10-Q, with the Commission

pursuant to Section 13(a) of the Exchange Act and related rules thereunder.

19. Capital One is a Delaware corporation headquartered in McLean, Virginia.

Capital One is a bank holding company subject to supervision, examination, and regulation by

the Federal Reserve. Capital One’s common stock is registered with the Commission pursuant to

Section 12(b) of the Exchange Act and trades on the New York Stock Exchange under the ticker

symbol “COF.” Capital One files periodic reports, including Forms 10-K and 10-Q, with the

Commission pursuant to Section 13(a) of the Exchange Act and related rules thereunder.

FACTS

I. BACKGROUND

A. Through His Work at the Federal Reserve Bank, Thompson Had Regular Access
to Material Nonpublic Information about Publicly-Traded Banks.

20. From 2022 through approximately May 2024, Thompson served as Deputy

Central Point of Contact for Large & Foreign Banking Organizations at the Federal Reserve

Bank.

21. In that role, Thompson managed a team whose primary responsibility was to

supervise and conduct examinations of Large Banking Organizations – U.S. banking firms with

total assets of at least $100 billion but excluding the eight largest U.S.-based, global,

systemically-important banks.

22. In his day-to-day work, Thompson regularly received, reviewed, communicated,

and otherwise had access to highly confidential and sensitive information (including material

nonpublic information) about all 18 institutions within the Large Banking Organizations

portfolio, which included NYCB and Capital One.

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23. Thompson could access this information in various ways, including through

systems and databases available to Federal Reserve staff (but not the public) and through

communications with other Federal Reserve personnel.

B. Thompson Controlled Brokerage Accounts in His and/or His Wife’s Names.

24. During the Relevant Period, Thompson and his wife held several trading and

brokerage accounts (the “Thompson Accounts”).

25. Thompson had full trading authority over all the Thompson Accounts.

26. Thompson conducted all trading in the Thompson Accounts during the Relevant

Period.

C. Thompson Was Prohibited from Trading in Bank Securities and from Disclosing
or Trading on Material Nonpublic Information Obtained Through his
Employment, and He Submitted a False Certification on That Topic.

27. During the Relevant Period, Thompson was subject to the Federal Reserve Bank’s

Code of Conduct, which included the following directives (emphases added):

[Federal Reserve Bank] examination and other bank or bank holding
company supervisory information is the property of the Board of Governors
of the Federal Reserve System (‘Board’) and may be disclosed only in
accordance with Board procedures.

…

In the course of working at the [Federal Reserve Bank], an employee may
have access to non-public information. Non-public information is
information that the employee knows, or reasonably should know: (a) has
not been made available to the general public; (b) is designated as
confidential, private or proprietary; or (c) is routinely treated by the [Federal
Reserve Bank] as confidential … An employee must strictly preserve the
confidentiality of such information. It can be disclosed only as required for
[Federal Reserve Bank] purposes and only as authorized.

…

An employee is prohibited from using non-public information for any
purpose other than [Federal Reserve Bank] business. In addition, an
employee may not engage, directly or indirectly, in any financial
transaction as a result of, or in reliance on, non-public information,
whether such information relates to the [Federal Reserve Bank] or any

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other person or institution. An employee may not allow the improper
use of such non-public information to further the employee’s own
private interest or that of another person….

28. A federal regulation, 5 C.F.R. § 6801.103, also prohibited Thompson from trading

in bank securities altogether (subject to certain exceptions not applicable here) – irrespective of

any material nonpublic information – because of his role as an employee of a bank regulator.

That regulation provided, “Prohibited interests: Except as permitted by this section, an employee

[of the Federal Reserve], or an employee’s spouse or minor child, shall not own or control,

directly or indirectly, any debt or equity interest in… [a] depository institution or any of its

affiliates.”

29. Each year, Thompson was required to complete an annual certification form

acknowledging the trading restrictions and disclosing, among other things, any bank securities

holdings as well as any actual or apparent conflicts of interest or violations of law or Federal

Reserve policy.

30. On approximately August 9, 2023, Thompson submitted his required annual

certification form for fiscal year 2023.

31. In this form, Thompson reported that he held no bank securities, had no actual or

apparent conflicts of interest, and had committed no violations of law or Federal Reserve policy.

32. In reality, as of the date of his certification, Thompson held bank stock and

options with a market value exceeding $500,000 in the Thompson Accounts, none of which he

reported.

33. In addition, Thompson failed to report that he opened and closed stock or options

positions in several bank issuers earlier in the year in transactions that were prohibited and that

created actual or apparent conflicts of interest with his supervisory responsibilities.

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II. THOMPSON MISAPPROPRIATED MATERIAL NONPUBLIC INFORMATION
FROM THE FEDERAL RESERVE BANK AND USED IT TO TRADE BANK
STOCKS AND OPTIONS.

A. Thompson Knowingly Traded in Capital One Stock Based on Material
Nonpublic Information He Received Through His Work.

34. On October 11, 2023, Thompson received an email from a Federal Reserve

colleague attaching a “preview” of Capital One’s third quarter 2023 earnings, showing earnings

per share (“EPS”) significantly exceeding market analysts’ estimates – a positive result.1

35. The email and its attachment were replete with material nonpublic information

collected or prepared by Federal Reserve staff in connection with its supervision of Capital One.

36. On October 26, 2023, just hours before Capital One was scheduled to release its

earnings for the third quarter to the public, Thompson purchased 7,500 Capital One shares in the

Thompson Accounts at a total cost of $678,000 – or an average price of $90.40 per share.

37. When the market closed on October 26, 2023, Capital One’s stock traded at

$89.51 per share.

38. After the market closed, Capital One publicly announced its third quarter

earnings, and the numbers were substantially similar or identical to the positive results reflected

in the earnings “preview” Thompson received two weeks earlier.

39. As a result of Capital One’s positive earnings announcement, the company’s stock

price rose the next day, October 27, 2023. When the market closed, Capital One’s stock traded

at $97.74 per share, an increase of 9.19% from the previous day’s closing price.

1 EPS measures the monetary value of a corporation’s net earnings per outstanding share of
common stock in a given period, and is a key measure of corporate profitability. Financial
analysts that track a company’s performance often publish estimates of the company’s EPS to
help investors predict how the company will ultimately perform during the period. When a
company’s EPS exceed analysts’ estimates, the company’s stock price typically reacts favorably.
In contrast, when a company’s EPS for a given period fall below analysts’ previously published
estimates, the stock price often drops as a result.

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40. Thompson sold his Capital One stock at an average price of $100.98 per share,

realizing ill-gotten profits of approximately $79,346.

B. Thompson Knowingly Traded in NYCB Options Based on Material Nonpublic
Information He Received Through His Work.

41. Between January 18 and January 26, 2024, Thompson learned, via work-related

communications with other Federal Reserve staff, that NYCB would soon be announcing

substantial, unexpected losses related to loans it acquired as part of its March 2023 acquisition of

a distressed bank, Signature Bank N.A. (“Signature Bank”).

42. During this period, Thompson exchanged a series of emails and instant messages

with Federal Reserve colleagues in which they discussed NYCB’s upcoming year-end earnings

release (scheduled for January 31, 2024) and what the disclosure of the loan losses might mean

for NYCB’s stock price and the financial results of other banks with similar risk profiles.

43. For example, on January 18, 2024, Thompson electronically messaged a Federal

Reserve colleague, whose supervisory work at that time was focused on NYCB, and wrote “well

i know you said earning[s] will be bad,” and speculated about how the news would impact

NYCB’s stock price once it was disclosed. The next week, on Friday, January 26, 2024,

Thompson messaged the same colleague and noted that “NYCB might be ok.”

44. On the morning of Monday, January 29, 2024, at approximately 9:56 a.m.,

Thompson messaged a different colleague asking for a “sneak peek at whatever the issue is

[with] NYCB so I can get a head start on [another bank’s] exposure that we know is coming.”2

The other bank Thompson referred to was another bank in the Large Banking Organizations

portfolio that acquired a different distressed institution in March 2023 under circumstances

similar to NYCB’s acquisition of Signature Bank that same month.

2 All times set forth herein are in Eastern Time.

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45. Less than two hours after emailing his colleague, on January 29, 2024, between

approximately 11:13 a.m. and 11:38 a.m., Thompson purchased a total of 1,600 out-of-the-

money put option contracts with an expiration date of February 16, 2024 – contracts that would

allow Thompson to make money if NYCB’s stock price fell by the February 16 expiration date –

in the Thompson Accounts at a total cost of approximately $14,495.3

46. Thompson’s January 29 NYCB put option purchases accounted for more than

99% of the total trading volume in those put options on his purchase date.

47. The next day, on January 30, 2024, NYCB’s stock traded at a price of $31.14 per

share when the market closed.

48. On Wednesday, January 31, 2024, before the market opened, NYCB publicly

announced its 2023 fiscal year-end earnings results, with EPS coming in significantly below

market analysts’ estimates – a negative result driven by hundreds of millions of dollars’ worth of

previously-undisclosed loan losses related to NYCB’s Signature Bank acquisition.

49. Later that day, at approximately 4:40 p.m., Thompson sent an email to several

Federal Reserve colleagues in which he acknowledged that he had known the week before that

NYCB would be announcing bad news: “Last week, [my team] caught wind of a potential credit

issues (sic) at NYCB and began to monitor and prepare for the earnings release today.”

50. By the close of trading that day, NYCB shares traded at $19.41 per share – a price

37% lower than the stock’s closing price the previous day.

3 A put option contract gives its buyer the right, but not the obligation, to sell 100 shares of
the underlying stock at a specified price (the “strike price”) on or before the expiration date in
exchange for paying a premium up front. Generally, the buyer of a put option expects that the
price of the underlying stock will fall on or before the expiration date, allowing the buyer to
profit by acquiring the stock at market price and selling it at the higher strike price.

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51. The next day, Thursday, February 1, 2024, Thompson sold his NYCB put options

and obtained ill-gotten profits of approximately $505,527 – representing a return of

approximately 3,745.2% in less than a week.

III. THOMPSON AGAIN FALSELY CERTIFIED IN REQUIRED DISCLOSURE
FORMS THAT HE HELD NO BANK SECURITIES AND ENGAGED IN NO
PROHIBITED TRADING.

52. During the Relevant Period, the Federal Reserve required that employees

promptly report any changes to their annual certification forms concerning securities holdings in

banks, potential conflicts of interest, and other matters.

53. On or about March 12, 2024, Thompson submitted an amended certification form

for 2023 in which he reported a potential conflict of interest arising out of discussions he was

having with Capital One about potential employment at the bank.

54. Once again, Thompson reported no bank securities holdings and no actual or

apparent conflicts or violations related to trading, despite having opened and closed stock or

options positions in several bank issuers (including NYCB and Capital One) in prohibited,

conflict-creating trades, based on material nonpublic information, since the date of his previous

August 2023 certification.

FIRST CLAIM FOR RELIEF
Violation of Exchange Act Section 10(b) and Rule 10b-5 Thereunder

55. The Commission re-alleges and incorporates by reference here the allegations in

paragraphs 1 through 54.

56. Thompson, directly or indirectly, in connection with the purchase or sale of

securities and by the use of means or instrumentalities of interstate commerce, or the mails, or

the facilities of a national securities exchange, knowingly or recklessly (i) employed one or more

devices, schemes, or artifices to defraud, (ii) made one or more untrue statements of a material

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fact or omitted to state one or more material facts necessary in order to make the statements

made, in light of the circumstances under which they were made, not misleading, and/or

(iii) engaged in one or more acts, practices, or courses of business which operated or would

operate as a fraud or deceit upon other persons.

57. By reason of the foregoing, Thompson, directly or indirectly, violated and, unless

enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5

thereunder [17 C.F.R. § 240.10b-5].

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court enter a Final

Judgment:

I.

Permanently enjoining Thompson from violating, directly or indirectly, Section 10(b) of

the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];

II.

Ordering Thompson to disgorge all ill-gotten gains he received directly or indirectly, with

prejudgment interest thereon, as a result of the alleged violations pursuant to Exchange Act

Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)];

III.

Ordering Thompson to pay civil monetary penalties under Section 21A of the Exchange

Act [15 U.S.C. § 78u-1]; and

IV.

Granting any other and further relief this Court may deem just and proper.

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DEMAND FOR JURY TRIAL

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission demands

trial by jury in this action of all issues so triable.

Dated: November 8, 2024
Respectfully submitted,

/s/ Timothy K. Halloran
Timothy K. Halloran (VSB No. 48352)
U.S. SECURITIES AND EXCHANGE COMMISSION
100 F Street, N.E.
Washington, D.C. 20549
Tel: (202) 551-4414 (Halloran)
Email: [email protected]

Joseph G. Sansone*
Lindsay S. Moilanen*
Derek M. Schoenmann*
David Bennett*
U.S. SECURITIES AND EXCHANGE COMMISSION
100 Pearl Street, Suite 20-100
New York, NY 10004-2616
Tel: (212) 336-9113 (Schoenmann)
Email: [email protected]
*Appearing pursuant to Local Civil Rule 83.1(D)(2)

Attorneys for Plaintiff

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