A Larchmont securities broker has been indicted on conspiracy and securities fraud charges in an alleged insider trading scheme.
David S. Cooper, 38, was arrested on Jan. 15 and pleaded not guilty to the charges, in Brooklyn federal court. He also was charged with fraudulent and deceptive practices in a civil case brought by the U.S. Securities and Exchange Commission that was filed in Brooklyn.
The criminal case and lawsuit name three men with whom Cooper allegedly fed confidential information that enabled them to quickly profit on new stock offerings.
Cooper’s alleged co-conspirators reaped about $2.5 million in ill-gotten gains, according to the lawsuit. Cooper’s employer earned about $1 million in sales credits and “Cooper received a substantial portion of that compensation.”
Cooper has worked as a broker for Joseph Gunnar & Co. in Uniondale, Nassau County, since 2009.
The other defendants are Randy “Ranjiv” Grewal, 54, of Anthem, Arizona; John “Clams” Lowe, 61, of Sayville, Suffolk County and Stuart, Florida; and Richard L. Ringel, 54, of Boca Raton, Florida.
For more than six years, from 2018 to 2024, the men allegedly exploited insider information before stock offerings were made public, thus gaining an unfair advantage over other investors.
The feds claim that Cooper used his position at the brokerage to obtain confidential information from investment banks that were underwriting new stock offerings, including the timing and initial stock prices. Then the three traders allegedly used the information to engage in short sales.
Stock offerings tend to cause the price of existing shares to decline because the new shares dilute existing shareholders’ percentage of ownership. In a short sale, the trader sells a security that he does not own yet but has arranged to buy later. If the price drops, the trader can buy the security back at the lower price and thus profit.
On April 27, 2023, for instance, Cooper allegedly gave Ringel insider information about Tharimmune Inc. About 15 minutes later, according to the SEC lawsuit, Ringel began short selling the stock. He sold 20,866 shares at about 76-cents to 84-cents per share.
That evening, Tharimmune announced an offering of new stock at 50-cents per share. Then Ringel bought the 20,866 shares for $10,549 and made a $6,086 profit.
Other stocks identified in the criminal and civil cases were issued by Chicken Soul for the Soul Entertainment Inc., Revelation Biosciences Inc., Tivic Health Systems Inc., and Zyversa Therapeutics.
Cooper and another employee of the brokerage, who is referred to only as Representative A in the SEC lawsuit, “routinely gave the traders material, non-public information about the timing and/or price offerings that they had obtained from underwriters.”
In response to a request for Cooper’s side of the story, criminal defense attorney Zach Intrater replied, “We do not have any comment at this time.”
The men could be sentenced up to 25 years in prison, if convicted. In the SEC lawsuit, the government is demanding that they disgorge ill-gotten gains.
