A major insider trading case has unfolded involving Michael Smith, 48, of Eagle, Idaho. Smith served as the President and Chief Operating Officer of Company-1 starting around June 2022. Company-1 is an Idaho-based business whose stock is publicly traded on NASDAQ. Because of his top-level position, Idaho Executive regularly handled information that was sensitive, private, and capable of affecting the company’s stock price.
Court documents show that by at least June 2024, Smith learned that Company-1 was preparing for an acquisition by another company. This information was considered material non-public information, commonly called MNPI.
Like many companies, Company-1 had an Insider Trading Policy. This policy clearly stated that no employee, including senior executives, was allowed to trade the company’s stock when they had MNPI. Smith was fully aware of these rules. Despite this, he did not follow them.
How the Idaho Executive used another person’s account to make illegal trades
On July 26, 2024, Smith took action that later became central to the federal investigation. He used a brokerage account belonging to Individual-A, a person with whom he shared a close personal relationship. Smith placed trades under Individual-A’s name. This allowed him to buy Company-1 stock secretly.
Investigators state that Idaho Executive bought the stock because he knew the acquisition news would soon become public and increase the price. He understood that once the announcement was made, the value of Company-1 shares would likely rise sharply.
According to the details provided, Idaho executive knowingly used MNPI to carry out these stock purchases. The timing of the July 26 trades showed that he acted directly on the confidential information he had learned through his corporate position. Federal authorities later confirmed that these trades were performed specifically to benefit Individual-A.
During this time, Company-1 employees, investors, and the public had no idea that an acquisition was coming. Only a few senior insiders, including Smith, knew.
Stock price surge after public announcement and the resulting profit
The acquisition news was officially released to the public on August 7, 2024. The announcement had an immediate impact. Company-1’s stock price rose by nearly 50%.
The very next day, on August 8, 2024, Smith sold the shares he had secretly purchased for Individual-A. These trades generated a profit of approximately $145,754.69. The investigation found that the profit was intended to financially benefit Individual-A, demonstrating that Smith’s actions were not simply for himself but for someone close to him.
This entire sequence — buying shares privately before the news and selling them after the price surge — became clear evidence of insider trading. Without access to MNPI, an ordinary investor could not have predicted this stock movement. Idaho Executive’s position in the company allowed him to take advantage of information others did not have.
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Guilty plea, legal process, and officials involved
Federal authorities announced that Smith pleaded guilty to one count of securities fraud. This crime involves illegal actions related to buying or selling stocks. Securities fraud is taken very seriously in the United States because it affects investors, companies, and the overall fairness of financial markets.
A conviction for securities fraud carries a maximum penalty of 20 years in prison. Although this is the maximum legal limit, the actual punishment will be decided by a federal district court judge. The judge will look at the U.S. Sentencing Guidelines and other legal factors before choosing the final sentence.
The announcement of Smith’s guilty plea was made by Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division; U.S. Attorney Bart M. Davis for the District of Idaho; and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service Criminal Investigations Group (USPIS-CI). These officials work on serious cases involving fraud, corruption, and financial wrongdoing.
USPIS-CI is leading the investigation. The prosecution of the case is being handled by Trial Attorneys Kyle Crawford and John Liolos of the Criminal Division’s Fraud Section, along with Assistant U.S. Attorney Sean Mazorol for the District of Idaho. Their role is to present the evidence, handle courtroom procedures, and ensure that the case is managed according to federal law.