A former Las Vegas gaming executive tied to an insider stock trading incident has been barred from serving as an officer or director of any public company through late 2014.
U.S. District Judge James Mahan issued the order last week against R. Brooke Dunn, who agreed in June to pay a $181,594 fine to settle a lawsuit filed by regulators over the incident.
In the suit, the U.S. Securities and Exchange Commission charged that after Dunn, then a Shuffle Master Inc. senior vice president, learned in February 2007 that Shuffle Master would report disappointing quarterly earnings, he tipped off a friend. The friend, Nicholas P. Howey, of Darnestown, Md., used the non-public information to trade $237,000 worth of Shuffle Master securities, the SEC alleged.
Dunn left Shuffle Master in late 2008 amid the SEC probe into his conduct.
Besides seeking the fine against Dunn, the SEC sought to ban him for life from serving as an officer or director of any public company, citing what it called "his brazen violation of the securities laws, his illegal disclosure of Shuffle Master’s confidential information and his betrayal of a position of trust."
Mahan, however, ruled that a lifetime officer-and-director bar would be too harsh a punishment as Dunn’s violations did not amount to "egregious behavior" and were not comparable to cases in which securities violators had personally profited from hundreds of thousands of dollars.
Dunn’s only motivation in tipping off his friend was that Dunn was trying to score tickets from Howey for the sold-out Jersey Boys show on Broadway in New York, Mahan’s ruling said.
"Mr. Dunn traded the information for the opportunity to pay face value for Broadway show tickets; he did not make any actual money off of this transaction," Mahan wrote. "Nonetheless, Mr. Dunn abused his fiduciary position, and violated his employment agreement and the company’s code of conduct by sharing confidential information."
Mahan wrote that Dunn effectively has been barred from serving as an officer or director since he was sued by the SEC in Las Vegas three years ago.
Still, Mahan wrote, "the court finds that an additional ban may serve to deter future violations, promote respect for the securities regulations and sufficiently punish Mr. Dunn for his conduct."
Dunn cannot serve as an officer or director until Nov. 19, 2014.