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In the Matter of Judy K. Wolf
Securities and Exchange Commission
No. 3-16195 (2015)
In 2010, 3G Capital acquired Burger King and took Burger King private. Waldyr Da Silva Prado Neto, an employee of Wells Fargo, bought Burger King securities within 10 days before the announcement of Burger King’s acquisition. Judy K. Wolf (defendant) was the compliance officer at Wells Fargo responsible for conducting insider-trading reviews. Wolf had worked as a compliance officer for a decade and had no history of securities violations. Wolf investigated Prado’s Burger King securities purchases and discovered facts suggesting that Prado had engaged in insider trading. Wolf did not contact Prado or her managers about the potential insider trading. Instead, Wolf closed her review and noted that there were no findings of insider trading. In 2012 the Securities and Exchange Commission (SEC) (plaintiff) opened an investigation into Prado’s trading and requested all documents, including documents from the compliance department, related to the trading. Before sending her compliance review of Prado’s trading to the SEC, Wolf added two additional sentences to the review claiming that rumors had been circulating prior to Burger King’s acquisition that a private equity group might acquire Burger King. Wolf accidentally logged that the sentences were added in 2012 rather than 2010. The SEC questioned Wolf about the sentences and their date discrepancies. Wolf lied and said that she wrote the wrong date in 2010. Eventually, Wolf admitted that she added the two sentences in anticipation of the SEC’s investigation into Prado. Wolf was fired by Wells Fargo and told the SEC that she would never work in the securities industry again. Prado was found guilty of insider trading, and Wolf’s actions did not ultimately harm the SEC’s investigation into Prado. The SEC opened an investigation into Wolf’s actions to determine whether she should be sanctioned for falsifying records and lying to the SEC.
Rule of Law
Holding and Reasoning (Elliot, J.)
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