Broker and Three Traders Indicted for Years’ Long Insider ...

Earlier today, at the federal courthouse in Brooklyn, an indictment was unsealed charging broker David Cooper and traders Randy Grewal, John Lowe and Richard Ringel with conspiracy to commit securities fraud and securities fraud for their involvement in an insider trading scheme. Cooper was arrested today in Westchester and will be arraigned this afternoon before United States Magistrate Judge Joseph A. Marutollo. Grewal was arrested in Anthem, Arizona and Lowe and Ringel were arrested in Stewart and Boca Raton, Florida, respectively. They will be arraigned in the Eastern District of New York at a later date.

Judy Philips, Acting Attorney for the United States for the Eastern District of New York, William S. Walker, Special Agent in Charge, Homeland Security Investigations New York (HSI) and Brendan Donahue, Acting Inspector in Charge, United States Postal Inspection Service, New York Division (USPIS), announced the arrests and charges.

"As alleged, the defendants exploited their access to inside information for years to gain an unfair advantage over the investing public for their own personal gain," stated Acting Attorney for the United States Philips. "The arrests and indictment demonstrate that this Office will protect the integrity of the securities markets and aggressively prosecute those who engage in insider trading."

Ms. Philips expressed her appreciation to the U.S. Securities and Exchange Commission, New York Regional Office, and the Financial Industry Regulatory Authority for their significant cooperation and assistance during the investigation.

"Those who participate in illicit trading schemes undermine our U.S. Securities and Exchange Commission laws and regulations with selfish ambition," stated HSI New York Special Agent in Charge Walker. "HSI continues to work side-by-side with our law enforcement partners to ensure fraudsters who manipulate our legal financial systems are identified and prosecuted to the fullest extent."

"This is a case of pure greed where individuals lied, obtained information illegally, and used it solely for their own personal financial gain. Postal Inspectors, along with our law enforcement partners, will continue to investigate fraud vigilantly and will protect investors from falling victim to predatory behavior," stated USPIS Acting Inspector in Charge Donahue.

As alleged in the indictment, between approximately January 2018 and May 2024, the defendants conspired to obtain material non-public information (MNPI) about upcoming secondary stock offerings and to trade on that MNPI in advance of those offerings. The defendants illegally obtained MNPI from numerous sources, including through Cooper, who obtained MNPI in his capacity as an employee of a broker-dealer (Broker-Dealer) with investment banks involved in and underwriting the secondary stock offerings. The MNPI included specific deal information such as the identity of the public company issuing the secondary offering; the timing of the deal; the structure of the deal; and the price at which the company would offer its stock in the upcoming offering. Cooper breached his duty of confidentiality to Broker-Dealer and misappropriated the information when he improperly disclosed it to Lowe, Ringel and others with knowledge that they intended to use the information to execute short sales in advance of the public announcement of the secondary offerings. Cooper shared the MNPI to induce Broker-Dealer customers, including Lowe and Ringel, to commit to buy shares in the offerings so that Cooper and Broker-Dealer would receive compensation from the underwriters. Lowe, in turn, passed MNPI to Grewal. Lowe, Ringel and Grewal used MNPI to obtain more than $1 million in illegal profits on their short sales in advance of secondary offerings.

Evidence obtained from judicially authorized wiretaps revealed that in connection with numerous secondary offerings between approximately January 2023 and May 2023, Cooper and a co-conspirator (Co-Conspirator #1) obtained MNPI from investment firms that were underwriting the secondary offerings and provided MNPI to Lowe, Ringel and others, with knowledge that Lowe, Ringel and others intended to trade securities in advance of secondary offerings based on the MNPI. Those secondary offerings included the companies Chicken Soul for the Soul Entertainment, Inc. (NASDAQ: CSSE), Revelation Biosciences, Inc. (NASDAQ: REVB) and Tivic Health Systems, Inc. (NASDAQ: TIVC).

Fraudulent Trading on MNPI in the CSSE Secondary Offering

On or about March 30, 2023, Cooper obtained MNPI about the timing and pricing of the CSSE offering from the sole managing underwriter for the deal and shared that information with Ringel, who traded in CSSE in advance of the offering using the information, and Co-Conspirator #1, who gave the inside information to Lowe. Lowe traded based on the MNPI and tipped Grewal, who also traded using the MNPI.

Fraudulent Trading on MNPI in the REVB Secondary Offering

Between February 6, 2023 and February 8, 2023, Lowe obtained MNPI about the timing of the REVB offering from a representative of the sole underwriter on the deal and passed it to Grewal, who traded in REVB using the information. Between February 7, 2023 and February 9, 2023, Ringel traded REVB based on MNPI that Cooper received from another representative of the sole underwriter on the deal.

Fraudulent Trading on MNPI in the TIVC Secondary Offering

On or about February 6, 2023, Cooper called a representative of the sole managing underwriter for the TIVC offering. The next day, Co-Conspirator #1 communicated to Lowe that TIVC intended to offer shares of its stock in a secondary offering. After learning this information, Lowe traded in TIVC and passed the MNPI he received from Co-Conspirator #1 to Grewal, who then also traded in TIVC. Between February 6, 2023 and February 8, 2023, Ringel and Cooper spoke over the telephone numerous times and Cooper executed a number of short sales in TIVC. In particular, on February 8, 2023 (after Co-Conspirator shared MNPI about the TIVC deal with Lowe), Cooper spoke with Co-Conspirator #1 and then with Ringel. Approximately six minutes after Ringel and Cooper spoke, Ringel executed additional short sales in TIVC.

The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty. The defendants face up to 25 years in prison if convicted of the charges.

The government's case is being handled by the Office's Business and Securities Fraud Section and the Criminal Section of the Office's Long Island Division. Assistant United States Attorneys Jessica K. Weigel, Sophia M. Suarez and Adam R. Toporovsky are in charge of the prosecution, with assistance from Paralegal Specialist Liam McNett.

The Defendants:

DAVID COOPER
Age: 38
Larchmont, New York

RANDY GREWAL
Age: 54
Anthem, Arizona

JOHN LOWE (also known as "Clams")
Age: 61
Sayville, New York

RICHARD RINGEL
Age: 54
Boca Raton, Florida

E.D.N.Y. Docket No. 25-CR-10 (DG)

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