SEC Charges Financial Professional with Insider Trading in His Company’s Securities

The United States Securities and Exchange Commission (SEC) has taken legal action against Jonathan J. Ferrie, a resident of Connecticut and a former financial professional at the Cigna Group, for insider trading ahead of Cigna’s quarterly earnings announcement in August 2021. Ferrie has opted to settle the charges, agreeing to various measures, including paying a total of over $33,000 in disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty.

The SEC’s complaint, filed in the U.S. District Court for the District of Connecticut, alleges that Jonathan J. Ferrie, based in Prospect, Connecticut, engaged in securities trading involving his former employer, Cigna, using material non-public information he obtained while serving as the financial controller of a division within Cigna’s health insurance business. As per the SEC’s complaint, Ferrie became aware in June 2021 that his division’s profitability in the second quarter of 2021 had fallen below expectations due to unforeseen increases in health insurance costs related to the Covid-19 pandemic. It is alleged that Ferrie promptly purchased Cigna stock options that would only yield profits for him if Cigna’s stock significantly declined in value by mid-August 2021. Ferrie allegedly possessed knowledge that Cigna was set to announce its quarterly financial performance by early August 2021. The SEC further contends that on August 5, 2021, Cigna disclosed higher-than-anticipated increases in medical costs incurred as its health insurance customers emerged from pandemic lockdowns, which mirrored the metric Ferrie had observed within his own division. The SEC asserts that Cigna’s stock price promptly plummeted by 13 percent following the announcement. According to the SEC’s complaint, Ferrie sold his options on the morning of the public announcement, reaping a profit of approximately $16,000, amounting to an approximately 236% return on his initial investment. The SEC maintains that Ferrie’s trading actions violated Cigna’s written policy, which explicitly prohibited both insider trading and trading by employees in options tied to Cigna stock.

Without admitting or denying the allegations in the SEC’s complaint, Ferrie has agreed to the entry of a judgment mandating a permanent injunction against him, barring him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 under that act. Ferrie has also consented to pay $16,039.78 in disgorgement, $1,497.17 in prejudgment interest, and a civil money penalty of $16,039.78. Additionally, Ferrie has accepted a three-year bar from serving as an officer or director of a public company. It is important to note that this settlement remains subject to court approval.