In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) has alleged that a former financial analyst used Xbox audio chat to conduct insider trading. The SEC has charged four individuals with insider trading of securities based on confidential information related to various business mergers and acquisitions. Additionally, criminal securities fraud charges have been filed against three of the accused in the U.S. District Court for the Southern District of New York.
SEC complaint nails analyst as mastermind
The alleged mastermind behind this insider trading scheme is Anthony Viggiano, who, according to the SEC complaint, misused his access to confidential information during his tenure as an analyst at two different financial firms. Viggiano is said to have shared this privileged information with his friends Stephen Forlano and Christopher Salamone, as well as another individual named Nathan Bleckley. To conceal their activities, Viggiano allegedly provided Forlano with some of his funds to trade with, to reduce suspicions that could arise from his trading.
The SEC complaint further reveals that the other individuals named in the case engaged in insider trading based on the tips provided by Viggiano, resulting in substantial trading profits for each of them. However, one of the most astonishing elements of this case is the alleged use of Xbox audio chat to facilitate insider trading. It is claimed that Stephen Forlano instructed Nathan Bleckley to use the Xbox platform for illicit communications. According to the SEC, during an Xbox audio call that is believed to have occurred on or before August 31, 2022, Forlano relayed insider information from Viggiano to Bleckley.
Specifically, they discussed the impending acquisition of American e-commerce company ChannelAdvisor (ECOM) and shared an anticipated share price for the company. In response to this information, Bleckley reportedly purchased ECOM stock. When the news of the acquisition became public, ECOM’s stock price surged by over 55%, going from $14.70 to $22.79 on the New York Stock Exchange. Bleckley then sold all 1,057 shares and 50 ECOM call option contracts, resulting in profits totaling $23,003. The SEC complaint goes on to detail other instances of alleged insider trading within this scheme.
Uncovering the use of gaming platforms in financial misconduct
Christopher Salamone is reported to have gained approximately $322,000, Stephen Forlano approximately $114,000, and Nathan Bleckley, along with other individuals, collectively earned roughly $110,000 in illicit profits. One question that arises in this case is how the SEC obtained evidence of the Xbox audio calls. While the details of their investigation are not fully disclosed, it is worth noting that Xbox consoles are not known for their privacy-friendly communication methods. These consoles can record, share, and report in-game audio to Microsoft, particularly when incidents of inappropriate behavior occur.
However, Xbox employees have stated that they do not actively listen to audio calls and do not store conversations. According to Xbox GM of Trust and Safety Kim Kunes, “Recording is strictly done through the reporting functionality, and it’s only available for moderation purposes.” Kunes also emphasized that recorded clips cannot be saved or shared separately and are deleted 24 hours after being initially captured. This case raises concerns about the potential misuse of gaming platforms and online communication tools for illegal activities such as insider trading.
While the Xbox platform may not be actively monitored for financial misconduct, this incident serves as a reminder that sensitive information should be handled with care and that regulatory authorities have the means to investigate and uncover illegal activities, even in unconventional settings. The SEC’s allegations of insider trading involving Xbox audio chat highlight the importance of ethical behavior and the risks associated with misusing technology for unlawful activities. As this case unfolds, it will be closely watched to see how regulatory authorities continue to adapt to the evolving landscape of financial misconduct in the digital age.
