WASHINGTON (AP) — Federal regulators have accused a former technology manager at Green Mountain Coffee Roasters Inc. of insider trading, saying he profited by using quarterly earnings data he obtained ahead of company announcements.
The Securities and Exchange Commission announced the civil charges Friday against Chad McGinnis, formerly a systems administrator at Green Mountain, and his friend Sergey Pugach. They made a combined $7 million in illegal profits by using the inside information before 12 of Green Mountain's 13 quarterly earnings releases since 2010, the SEC said.
Waterbury, Vt.-based Green Mountain wasn't accused of wrongdoing. The company said in a statement that it is cooperating with the SEC's investigation and that it had terminated McGinnis for violations of its policy against insider trading.
Attorneys representing McGinnis and Pugach said they had no immediate comment.
McGinnis lives in Morrisville, Vt., while Pugach lives in Hamden, Conn., the SEC said.
Green Mountain makes the Keurig system, which brews beverages one at a time.
The SEC said that as a systems administrator, McGinnis had access to areas on the company's computer server where drafts of pending news releases and earnings announcements were stored. McGinnis bought Green Mountain securities such as options shortly before the company announced quarterly earnings, the SEC said in its lawsuit filed in federal court in New Haven, Conn. McGinnis also passed the information to Pugach, his longtime friend and business associate, who used it to trade in his own account and his mother's, the agency alleged.
Brian Kelley, president and CEO of Green Mountain, said the company is "appalled" at the alleged actions of McGinnis. "All indications are that this case involves an irresponsible individual acting alone, and we have no reason to believe anyone else associated with the company was involved," Kelley said in a statement. "(Green Mountain) requires all employees and directors to adhere to our code of ethics and our insider trading policy."