A former senior managing director at Evercore Group was charged on Friday with securities fraud and other violations for setting up trades in accounts held by an ex-girlfriend and a close relative based on secret information he collected at work, according to a court filing.
Frank Perkins Hixon Jr., 55, was arrested on Friday morning, according to a Federal Bureau of Investigation spokesman. He was charged with five counts of securities fraud, two counts of securities fraud in connection with a tender offer and one count of making a false statement.
According to the charges, Hixon, who worked in Evercore's mining and metals group, allegedly arranged trades in shares of Evercore as well as two other companies: Westway Group, which merged last year with EQT Infrastructure II, and Titanium Metals, which was purchased last year by Precision Castparts.
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Hixon's lawyer did not immediately respond to a request for comment.
"This conduct is completely inconsistent with our culture and professional standards," an Evercore spokesman said. "As we continue to cooperate fully with the authorities, we want to make clear that we have zero tolerance for actions that violate our most cherished principles."
Hixon allegedly set up a trading account in 2008 in the name of a woman in Austin, Texas who was at the time five months pregnant with his child. The woman's name is not revealed in the criminal complaint.
In late 2011, as executives from Westway Group, a New Orleans-based liquid storage and feed company, discussed with their merger plans with Evercore's mining and metals team, the woman's online trading account registered trades in Westway shares that were made by someone logged in from a computer at Evercore's Manhattan offices, the complaint said.
Similar activity in the woman's account in shares of Titanium Metals and Evercore also corresponded with Hixon's work on the Titanium Metals Corp merger.
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According to the complaint, Hixon also coordinated with a "close relative" in Duluth, Georgia, on trades in the stocks in the relative's account. Hixon allegedly called the relative after learning information about the mergers and about Evercore's financial results. After the calls, the relative made trades in the relevant stocks.
Proceeds from the trades reached the hundreds of thousands of dollars.
—By Reuters with CNBC.com