Equity Trader Indicted on Securities Fraud Charges
Defendant Worked for Cushing MLP Asset Management LP in Dallas
|U.S. Attorney’s Office October 28, 2013|
DALLAS—Daniel Lutz Bergin, 41, of Dallas, made his initial appearance this afternoon in federal court in Dallas, following his self-surrender on an indictment charging 15 counts of securities fraud, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Bergin entered a not guilty plea to the indictment. He was ordered released on his own promise to appear, subject to certain conditions, including that he refrain from working in the financial services industry while on pretrial release. A trial date was not set.
According to the indictment, from 2008 to May 23, 2013, Bergin was an equity trader employed by Cushing MLP Asset Management LP (Cushing), an investment adviser located on Preston Road in Dallas. Cushing was a wholly owned subsidiary of Swank Capital LLC and had approximately $2.5 billion in discretionary assets under management. Cushing provided advisory and portfolio management services to institutional clients, including high net worth individuals, investment companies, pooled investment vehicles, pension and profit sharing plans, charitable organizations, and state/municipal government entities.
Primarily, Cushing invested client assets in energy infrastructure master limited partnerships (MLPs) that are traded on stock exchanges, royalty trusts, and other energy-income investments. Cushing has established policies and procedures, including a code of ethics, in compliance with regulatory requirements, that explicitly prohibit insider trading and outline restrictions on personal securities transactions by Cushing employees.
The indictment alleges that beginning in at least January 2010, until his termination on May 23, 2013, Bergin ran a “front-running” scheme in which he misused inside or material, non-public information when placing trades in a personal brokerage account held in his wife’s name. This scheme allowed Bergin to take advantage of limited opportunities to buy and sell the same securities in which he was placing trades on behalf of Cushing’s clients’ and proprietary accounts. Although Bergin disclosed certain personal brokerage accounts held in his name at Fidelity and Scottrade, he failed to disclose brokerage accounts in his wife’s name at Fidelity and eTrade.
An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, the maximum penalty for each count of securities fraud, as charged, is 25 years in federal prison, a $250,000, and restitution.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The investigation is being conducted by the FBI. Assistant U.S. Attorney J. Nicholas Bunch is in charge of the prosecution.