Risk & Compliance

Ex-Illumina Accountant Accused of Insider Trading

Martha Bustos allegedly passed on tips about the biotech firm's quarterly results to a close friend as part of a $6 million scam.
Matthew HellerJuly 11, 2019
Ex-Illumina Accountant Accused of Insider Trading

A former accountant for Illumina has been charged with leaking the biotech company’s quarterly results to a close friend as part of an insider trading scam that netted more than $6.2 million in illicit profits.

The U.S. Securities and Exchange Commission said Martha Bustos engaged in the scheme with her friend Donald Blakstad, the owner of investment firm Midcontinental Petroleum, who traded Illumina securities based on her tips and passed them on to at least four other individuals.

Blakstad rewarded Bustos lavishly for the information, even spending nearly $35,000 on an all-expense paid trip to New York for her and several of her friends, the SEC said in a civil complaint.

Federal prosecutors also announced Blakstad had been indicted on criminal charges of securities fraud. Bustos pleaded guilty in that case last month and is cooperating with the government.

“Bustos had an obligation to keep her company’s information confidential until announced to our markets, yet she repeatedly tipped Blakstad and allowed him to take advantage of her position in return for expensive travel and luxury merchandise,” Kelly L. Gibson, associate director of the SEC’s Philadelphia Regional Office, said in a news release.

Bustos, a CPA and San Diego resident, joined Illumina as an accountant in 2013 and from November 2016 until her resignation last month, worked as a commercial business analyst. In the course of her work, the SEC said, she received daily emails in advance of quarterly performance announements that contained preliminary profit and loss data.

According to the commission, the insider trading scheme began in April 2016 when Bustos tipped off Blakstad to Illumina’s results for the first quarter of the year. She allegedly went on to disclose confidential information about at least three other quarters.

Many of the trades made by Blakstad and his associates allegedly involved put option contracts, enabling them to profit when Illumina’s stock price fell after an earnings announcement.

The SEC said Blakstad personally realized about $4 million from the illicit trading and his associates made $2.2 million in profits.

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