Former Nasdaq MD charged with insider trading

The SEC alleges that Donald Johnson traded in advance of such public announcements as corporate leadership changes, earnings reports and forecasts, and regulatory approvals of new pharmaceutical products. He often placed the illegal trades directly from his work computer through an online brokerage account in his wife's name.

Johnson - who is also facing criminal charges from the US Department of Justice over the affair - trousered profits of more than $755,000 during a three-year period.

He retired from Nasdaq in 2009, following a 20-year career with the exchange.

"This case is the insider trading version of the fox guarding the henhouse," says Robert Khuzami, director of the SEC's division of enforcement. "Instead of protecting Nasdaq client confidences, Johnson secretly traded on client information for personal gain, even using his Nasdaq office computer to make the trades."

According to the SEC's complaint, Johnson illegally traded in advance of nine announcements involving Nasdaq-listed companies from August 2006 to July 2009. The illicit trading followed his transfer to the Market Intelligence Desk, a specialised department that provides issuers with general market updates, overviews of their company's sector, and commentary regarding the factors influencing day-to-day trading activity in their stocks.

Antonia Chion, associate director of the SEC's division of enforcement, comments: "Johnson brazenly stole nonpublic information from Nasdaq and its listed companies in breach of his duties of confidentiality to his employer and clients. Johnson assured at least one corporate official that she could share material nonpublic information with him because he was obligated as a Nasdaq employee to hold such information in confidence, and then he illegally traded on it."