Nicholas Howey, a former Darnestown resident and CEO of Troika Entertainment, has agreed to pay hundreds of thousands of dollars in fines to the Security Exchange Commission after the agency sued Howey and a Las Vegas gaming executive for alleged illegal insider stock trading.
The information was first reported by VegasInc.com.
In 2007, R. Brooke Dunn shared non-public information about his company, Shuffle Master Inc., with Howey, who then traded $237,000 in the company's securities to turn a profit, the SEC lawsuit states.
Dunn was a senior vice president at Shuffle Master, a casino equipment manufacturer, and tipped off Howey when he heard the company would have to report low quarterly earnings, the SEC alleged.
View the full lawsuit as a PDF on the right.
By using this confidential information, the two essentially turned a losing investment into a profitable one, the SEC lawsuit states.
VegasInc.com reported Monday that Dunn said he will pay a fine of $181,594 in a settlement agreement last week.
Howey has agreed to be liable for that amount, and must also pay $30,403 in interest and a second fine of $181,594, according to the report. That brings the minimum total Howey owes to $211,997, while he's liable for up to $393,591.
Howey co-founded Troika Entertainment, a Gaithersburg-based company that specializes in entertainment and Broadway-style productions around the world, according to its website.
Current CEO Randall Buck said Howey left the company about six or eight months ago and now lives in Las Vegas. Court documents still list Howey at a Darnestown address, and his LinkedIn account incorrectly states he is still the CEO.
In July 2011, BlockShopper.com reported that Howey listed his five-bedroom, 3.5-bathroom home on Braemar Crescent Way in Darnestown for sale for $769,000.
The U.S. Securities and Exchange Commission originally sued Dunn and Howey in 2009 after learning that Dunn had called Howey after a particularly unsettling executive meeting on Feb. 26, 2007, and told him the company's financial report ending on Jan. 31, 2008 would be dismal, according to a Las Vegas Sun report.
Within three minutes, Howey started trading the company's securities, the lawsuit alleges.
"Dunn disclosed during that call material non-public information relating to Shuffle Master’s anticipated announcement, in breach of his fiduciary duty to Shuffle Master and its shareholders," the suit states.
Whether Howey knew it or not, that and his subsquent actions were a violation of the Securities Act, the suit states.
Editor's Note: An earlier version of this story identified Nicholas Howey as current CEO of Troika Entertainment and a Darnestown resident. We regret the error.