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Feds: SEC Staffer Stole Data to Land CCO Role

Oh good lord: Federal prosecutors have indicted a former SEC enforcement attorney with stealing information from the agency while he worked there — so he could set himself up as chief compliance officer of a private equity firm under SEC investigation.

Michael Cohn, chief compliance officer of GPB Capital Holdings, was charged in federal court on Wednesday with obstruction of justice, unauthorized computer access, and unauthorized disclosure of confidential information. He pleaded not guilty, posted $250,000 bail, and presumably is lying low somewhere near his home in Norwalk, Conn.

Cohn

Cohn worked at the SEC from 2014 to 2018 as a compliance examiner in the Asset Management Unit of the Enforcement Division. According to the indictment against him, Cohn left the SEC on Oct. 12, 2018, and was named chief compliance officer at GPB four days later. 

For several weeks prior to his leaving the SEC, however, Cohn accessed confidential SEC files about an investigation into GPB, including “privileged attorney-client work product and contacts with law enforcement and other regulatory agencies,” according to a statement from the U.S. Attorney’s Office for the Eastern District of New York

Or, as one senior FBI official said: “When Cohn left the SEC to join GPB, he left with more than his own career ambitions. The proprietary information he allegedly retrieved —  from databases he wasn’t authorized to access — included compromising information about a GPB investigation and sensitive details related to the same.”

It gets better. Whatever Cohn discovered about the investigation into GPB, he told the firm about the inside information during his job interviews. On several occasions Cohn even briefed the GPB senior managers about the investigation. 

By the way, back in January GPB issued a press release about Cohn’s hiring where CEO David Gentile proudly said, “Michael’s deep knowledge and experience will be valuable to us as we continue to strengthen our compliance, risk management, and asset management processes and procedures across our organization.” Rather ironic words in light of today’s news.

Cohn faces up to 20 years in prison. My question is whether GPB reported him to the feds sometime after he joined as CCO; or did the SEC figure out Cohn’s misconduct first and now the feds are pressuring him to flip on the firm. Clearly if Cohn briefed senior management about information he obtained improperly and they didn’t report that, he is not the only one with problems here.

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