Former Cigna employee Jonathan Ferrie will pay more than $33,000 to settle insider trading allegations from the U.S. Securities and Exchange Commission.
Mr. Ferrie, of Prospect, Conn., was a financial controller for Cigna's health insurance division, according to a Sept. 18 SEC news release. The SEC alleged that he traded Cigna securities in advance of the company's August 2021 earnings announcement on the basis of material non-public information he obtained through his position.
The SEC alleged that in June 2021, Mr. Ferrie learned that his division's profitability during the second quarter of 2021 was below expectations due to an unexpected increase in health insurance costs related to the COVID-19 pandemic, according to the release. The SEC alleged that he immediately purchased stock options that would be profitable to him only if Cigna's stock substantially fell in price by mid-August 2021.
Cigna's stock price immediately dropped by 13 percent following the company's August 2021 earnings announcement, according to the release. Mr. Ferrie sold his options the morning of the public announcement, making a profit of $16,000, an approximately 236 percent return on the amount he invested. The SEC alleged that his trades violated Cigna's written policy expressly forbidding both insider trading and trading by employees in options on Cigna stock.
Mr. Ferrie did not admit or deny the allegations as part of the settlement, according to the release. He agreed to pay $16,039.78 in disgorgement, $1,497.17 in prejudgment interest, and a civil money penalty of $16,039.78. He also agreed to be barred from acting as an officer or director of a public company for a period of three years. The settlement is subject to court approval.
Cigna did not immediately respond to a message seeking comment. This story will be updated if more information becomes available.