Florida Financial Advisor Charged with Tipping Off Penny Stock Promoter

The Securities and Exchange Commission (“SEC”) has filed civil charges against stockbroker Kevin Dowd, a Boca Raton resident, for allegedly disclosing confidential insider information to a penny stock promoter. The U.S. Attorney’s Office for the District of New Jersey announced criminal charges against Dowd in a parallel action.

According to the SEC’s Complaint, in his role as a stockbroker, Dowd learned of the impending sale of Pharmasset, Inc. to Gilead Sciences. The SEC alleges that Dowd tipped off one of his friends, a penny stock promoter, who then purchased Pharmasset stock on the last trading day before the acquisition was made public. According to the SEC, the stock promoter also tipped another individual. The SEC claims the tipped-off pair sold the Pharmasset stock a few hours after the sale was announced and made a profit of $708,327 in just two trading days.

The SEC’s Complaint reflects that, just after Dowd tipped off his friend about Pharmasset’s sale, the friend gave Dowd a dock to be used with Dowd’s jet skis and a $35,000 cashier’s check. Dowd allegedly used the money to upgrade his swimming pool.

According to Dowd’s CRD Brokercheck report, he was employed at the Aventura office of Morgan Stanley Smith Barney until he was terminated in December 2012. The reason for termination given on the report is failure to disclose that he was the subject of investigations by the SEC and the U.S. Attorney’s Office.