LOS ANGELES A New York investment banker has been accused of insider trading ahead of Precision Castparts Corp.s (PCCs) $2.9-billion acquisition of Titanium Metals Corp. (Timet) in November 2012.
Frank Perkins Hixon Jr., a former senior managing director of Evercore Group LLCs Mining and Metals Group, New York, realized nearly $1 million in profits, according to allegations in criminal and civil complaints filed by the U.S. Attorney in New York and the U.S. Securities and Exchange Commission (SEC).
The criminal charges filed late last week in U.S. District Court in New York accuse Hixon of using insider information in trading for his own account and the accounts of his father and former girlfriend.
Hixon allegedly traded ahead on nonpublic information about PCC, New Orleans-based Westway Group LLCa provider of liquid bulk storageand his own company, Evercore, according to an SEC complaint unsealed in Austin, Texas.
While the criminal complaint identified the other individuals only as "Individual A" and "Individual B," the SEC lawsuit identified the relief defendants as Frank Hixon Sr., the defendants father, and Destiny "Nicole" Robinson, the mother of Hixon Jr.s child.
Hixon Jr.s attorney could not be reached for comment. A spokesmen for Portland, Ore.-based PCC had no comment and an Evercore executive could not be reached.
Hixon was charged with seven counts of securities fraud, each of which carries a maximum of 20 years in prison, and one count of making a false statement to the Federal Bureau of Investigation, which carries a maximum prison term of five years, according to the U.S. Attorneys office in Manhattan.
Hixon was arrested at his New York apartment Feb. 21 and charged later in the day in federal court, according to the U.S. attorneys office. He was released on a $5-million personal recognizance bond secured by $2 million in cash and ordered to surrender his passport to the court, according to court records.
The U.S. Attorneys office alleged in its criminal complaint that Hixon learned of PCCs impending acquisition of Timet during an October 2012 "pitch meeting" between Evercore and a special committee of Timets board of directors that he attended via teleconference from London.
Hixon began purchasing Timet shares for his associates accounts "within approximately one hour" of the meeting and sold all of the shares following the deals announcement for a combined profit of more than $250,000, according to the U.S. Attorneys office.
George Venizelos, assistant director in charge of the FBIs New York office, said Hixon allegedly "doubled down" when confronted about his "back-door trades" and lied to FBI agents who interviewed him.
The SEC said a federal judge has issued an emergency order freezing Robinsons brokerage account, which the agency alleges "contains the majority of proceeds from Hixon Jr.s illegal trading with a balance of approximately $1.2 million."
Robinson and Frank Hixon Sr. were named relief defendants by the SEC "for the purposes of recovering the illegal trading profits held in their accounts," the agency said in a statement. An SEC spokesman later said they are not facing civil charges.
The SEC said that text messages between Hixon Jr. and Robinson suggest the proceeds of the alleged illegal trades were "in lieu of formal child support payments."
PCCs takeover of Timet, now based in Exton, Pa., was considered one of the major consolidation moves in the titanium supply chain, bringing the producer under the same corporate umbrella as some of the aerospace industrys largest consumers, including forgings and castings producers, as well as manufacturers of fasteners and machined components (amm.com, Nov. 9, 2012).