FBI agents arrested a former senior Evercore Partners Inc. (NYSE:EVR) for allegedly trading on information about confidential mergers and earnings last Friday.
Frank Perkins Hixon, Jr., who was an Evercore managing director until January, was arrested on charges of earning nearly $950,000 by leveraging material non-public information.
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Traded in Titanium Metals and Westway Group
According to the FBI, during October 2012, Frank Perkins Hixon, Jr. attended Titanium Metal’s pitch meeting by teleconference from London wherein he learned about an acquisition of Titanium by Precision Castparts Corp. He also learned the approximate offer price and that the transaction was likely to close before year’s end.
Hixon started buying Titanium shares soon after the meeting, and in November he sold 40,000 shares of Titanium for a profit of about $180,000 and subsequently sold additional shares for a profit of approximately $72,350.
According to court filing, Mr. Hixon also allegedly placed trades of Westway Group in 2011 and 2012 as he was advising the company on a tender offer. Authorities also allege that he bought shares in Evercore after learning of its record earnings in January 2013.
Formal child support payments
The U.S. Securities and Exchange Commission sued Hixon and his girl friend, Destiny Robinson, with whom he fathered a child. According to a SEC statement, “Text messages between Hixon Jr. and Robinson suggest he was generating the illegal proceeds in lieu of formal child support payments”.
Hixon Jr. faces eight counts including securities fraud and lying to FBI agents. Securities fraud carries a maximum penalty of 20 years in prison. Hixon Jr. was released on a $5 million bond after appearing in Manhattan federal court.
Traded in accounts held by his father and ex-girlfriend
Hixon Jr. made $1.2 million using confidential information he picked up at the investment bank to make trades in accounts held by his father and the ex-girlfriend. By 2013, Evercore Partners Inc. (NYSE:EVR) had received alerts from the Financial Industry Regulatory Authority, an industry regulator, and the company confronted Hixon Jr. about trading belonging to Ms. Robinson and his father.
According to the SEC complaint, “When confronted by Evercore with the fact that he claimed not to know his father, Hixon Jr. said that although he saw ‘Frank P. Hixon of Duluth, Georgia’ on the list and recognized him as having the same name as his father, he didn’t identify him to Evercore Partners Inc. (NYSE:EVR) as someone he knew because ‘Hixon’ is a common name in the South and his father didn’t live in Duluth”.
The complaint continued, “When Hixon Jr. was confronted again with information that he did know them, he falsely claimed he knew Robinson, whose legal name is Nicole, by a different first name”.