Former SEC accountant pleads guilty to illegal securities trading — and then lying about it

A former SEC accountant has pleaded guilty to filing false ethics forms in order to conceal his illegal options trading while working at the agency. David R. Humphrey, who worked in the Securities and Exchange Commission's Division of Corporate Finance from 1998 to 2014, used his office computer during business hours to trade prohibited securities, including put options on Citigroup shares, the Justice Department said. Mr. Humphrey also settled parallel civil charges with the SEC and will pay more than $108,000 in penalties, ill-gotten profits and pre-judgment interest and will be permanently suspended from practicing as an accountant on SEC matters, the regulator said. The SEC's charges against Humphrey were unusual because the agency rarely takes enforcement action against one of its own employees, even those who have faced criminal prosecutions for ethics violations related to trading, Reuters said in a report. Mr. Humphrey's trading was conducted for his own accounts, as well as for his mother and a friend, the SEC said. When questioned by the SEC's Office of Inspector General about his trading activities during an investigation in 2014, Mr. Humphrey continued to lie about his trading, the SEC said in a release. The SEC prohibits all employees from trading in options or derivatives, and requires staff to disclose their securities holdings and transactions to the agency's ethics office in annual filings. According to Reuters, Mr. Humphrey is not accused of using material non-public information for his trades, and quotes the SEC as saying that he often suffered "significant losses."