Gain Capital’s $236 Million Deal That Led to an Insider Trading Scandal

<p> The
Securities and Exchange Commission (SEC) has announced a settlement with former
financial services executive Joseph Conlan over insider trading allegations.
The charges relate to Conlan's trading in GAIN Capital Holdings, Inc. (GCAP)
stocks ahead of a public announcement that StoneX Financial would acquire the
company. </p><p>As part of
the <a href="https://www.financemagnates.com/terms/s/settlement/">settlement</a>, Conlan is required to pay disgorgement of his ill-gotten gains,
along with prejudgment interest and a civil penalty totaling $159,389.</p><p>Conlan Settles GAIN
Capital Insider Trading Charges with SEC</p><p>Conlan, who
was previously the Global Head of FX Sales at StoneX Financial (formerly known
as INTL FCStone, Inc.), came under scrutiny for trading GCAP stocks based on
nonpublic information. He learned about the upcoming <a href="https://www.financemagnates.com/terms/a/acquisition/">acquisition</a> from a close
friend and former colleague still employed at StoneX. Consequently, Conlan
purchased GCAP stocks, which later surged by the acquisition announcement,
netting him a profit of $73,627.47.</p><p>In response
to the acquisition news that emerged <a href="https://www.financemagnates.com/forex/brokers/intl-fcstone-to-acquire-gain-capital-in-all-cash-deal/" target="_blank" rel="follow">at the end of February 2020</a>, GCP's stock
price surged by 66% in the opening session, rebounding from historical lows.</p><p>The SEC's
investigation revealed that Conlan violated Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5. Without admitting or denying the
allegations, he agreed to a cease-and-desist order. </p><p>"Conlan
agreed to settle the charges by consenting to a cease-and-desist order, a bar
from serving as an officer or director of a public company for a period of five
years, and an order to pay disgorgement of $73,627.47, prejudgment interest of
$12,134.41, and a civil penalty of $73,627.47," <a href="https://www.sec.gov/enforce/34-98824-s">the SEC commented</a> in the official
statement.</p><p>The SEC's
Enforcement Division's Market Abuse Unit, led by Derek M. Schoenmann and
Lindsay Moilanen, conducted the investigation.</p><p>$236 Million Purchase</p><p>The $236
million acquisition of GAIN Capital by StoneX Financial <a href="https://www.financemagnates.com/forex/brokers/stonex-completes-236-million-gain-capital-acquisition-deal/" target="_blank" rel="follow">was finalized in July
2020</a> despite initial resistance from many of GAIN's shareholders. Ultimately,
the deal secured 71% shareholder approval and was executed as an all-cash
transaction at $6 per share. StoneX's CEO, Sean O'Connor, <a href="https://www.financemagnates.com/executives/interview/intl-fcstone-ceo-sean-oconnor-talks-rebranding-gain-takeover/" target="_blank" rel="follow">highlighted in a 2020
interview</a> that the acquisition made financial sense and added valuable
intellectual assets to the group. </p><p>After the
acquisition, StoneX <a href="https://www.financemagnates.com/forex/brokers/gain-acquisition-gets-stonex-82-million-bargain-purchase-benefit/" target="_blank" rel="follow">reported an $81.8 million bargain purchase gain</a> in its Q3
2020 financial report, indicating a boost in operating revenue and income. </p><p>By March
2021, StoneX began the process of <a href="https://www.financemagnates.com/forex/brokers/exclusive-stonexs-gain-capital-winds-down-fx-business-in-the-uk/" target="_blank" rel="follow">phasing out its FX business under the GAIN
Capital brand in the UK</a>. This move was part of a broader strategy to
restructure and integrate GAIN into StoneX, thereby reallocating capital more
efficiently.</p>

This article was written by Damian Chmiel at www.financemagnates.com.