Litigation Release No. 24713 / January 13 2020
Securities and Exchange Commission v. Robert O. Carr and Katherine M. Hanratty, No. 3:18-cv-01135 (D. Conn. filed July 10, 2018)
According to the SEC's complaint, filed on July 10, 2018, Carr provided his longtime girlfriend, Katherine M. Hanratty, with confidential information about a potential acquisition of Heartland by another payment processing company. As alleged, in the weeks leading up to the merger announcement, Carr gave Hanratty $1 million to open a brokerage account, which she used to purchase Heartland stock. The complaint alleged that Hanratty opened the account with Carr's knowledge, made Carr the beneficiary of the account, and purchased more than 11,000 shares of Heartland stock. After the merger was announced, Heartland's stock price rose substantially, and Hanratty sought Carr's advice about when to sell the stock. Hanratty ultimately liquidated her entire position in a single day, for profits of more than $250,000.
On May 10, 2019, the court entered a preliminary judgment by consent, permanently enjoining Carr from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay a civil penalty of $250,628. On January 10, 2020, the court issued an order barring Carr from serving as an officer or director of a public company for two years.
The court previously entered a judgment by consent against Hanratty, permanently enjoining her from future violations of the same provisions as Carr and ordering her to pay $250,628 in disgorgement, $27,351 in prejudgment interest, and a $250,628 civil penalty.