Oakland investment advisor charged with securities fraud, insider trading
OAKLAND - An Oakland investment advisor was charged with securities fraud and insider trading on Tuesday, the U.S. Department of Justice announced.
John Mendes, 39, is a registered investment advisor accused of using insider information to purchase and sell stocks that he received from a friend who worked for Granite Construction Inc., a publicly traded construction materials company in Watsonville. Granite negotiated with and eventually acquired another company, Layne Christensen Co., a construction and infrastructure business from Texas.
Prosecutors allege that the Granite employee shared information with Mendes about the pending deal with Layne Christensen Co.; however, the government says the employee "had a history of sharing confidences" with Mendes and expected that he would keep the non-public information private.
Instead, prosecutors allege that Mendes breached that duty and used the employee's information to trade on Layne's stock before Granite's public announcement in February 2018.
According to prosecutors, Mendes allegedly bought Layne stock and options in the names of family members and several of his clients between November 2017 and January 2018. All of these securities were sold later for a profit after the announcement that Layne would be acquired by Granite. Mendes' purchases and sales netted about $242,000 in those accounts, the government said.
Mendes is charged with one count of securities fraud and is facing a maximum sentence of 20 years in prison and a fine of $5 million.