BASEBALL BUMS BET BIG ON INSIDE DISH! Minor Leaguers Nabbed for Taco Trading Scandal!

SEC v. Jordan Qsar, Austin Bernard, Grant Witherspoon, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26186, dated December 5, 2024.

The SEC charged four former minor league baseball players with insider trading related to the acquisition of Del Taco by Jack in the Box. Three of the players, Jordan Qsar, Austin Bernard, and Grant Witherspoon, have consented to final judgments, agreeing to pay disgorgement, prejudgment interest, and civil penalties based on their illegal profits.

In Plain English

Imagine you're about to buy a popular snack, but a friend who works at the snack company tells you it's going to be bought by a bigger company. You then buy a lot of the snack's stock options, hoping the price will go up when the news breaks. This is what happened here, but it was illegal because the information was private. The SEC stepped in and made the players who did this pay back their illegal profits, plus extra fines.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Inside Information Obtained Jordan Qsar, a former minor league baseball player, learned about the impending acquisition of Del Taco Restaurants, Inc. by Jack in the Box Inc. He received this material non-public information from a friend and former teammate who was involved in the deal.
2. Illegal Trading by Qsar Qsar acted on this confidential information by trading in Del Taco securities. He made approximately $56,500 in illegal profits from these trades.
3. Tipping Off Teammates Qsar then shared the inside information with two other former minor league baseball players, Austin Bernard and Chase Lambert. This act of tipping is also a violation of securities laws.
4. Bernard and Witherspoon Trade Austin Bernard and Grant Witherspoon, after being tipped by Qsar, used the non-public information to purchase Del Taco call options. This trading activity was designed to profit from the expected price increase following the acquisition announcement.
5. Bernard's Profits Bernard's illegal trading based on the inside information resulted in approximately $64,700 in profits.
6. Witherspoon's Profits Witherspoon also profited from the illegal trades, making approximately $42,800.
7. SEC Investigation Initiated The SEC's Market Abuse Unit's Analysis and Detection Center flagged suspicious trading patterns around the Del Taco acquisition announcement, initiating an investigation into the trading activity.

The Enforcement Action

On November 18, 2024, the SEC obtained final judgments against Jordan Qsar, Austin Bernard, and Grant Witherspoon, all former minor league baseball players, in connection with an insider trading scheme. The complaint alleged that Qsar learned of the Jack in the Box acquisition of Del Taco and traded on the information, tipping Bernard and Witherspoon. Qsar was ordered to pay disgorgement of $56,470.00, prejudgment interest of $9,986.60, and a civil penalty of $63,194.00. Bernard was ordered to pay disgorgement of $64,693.00, prejudgment interest of $11,440.82, and a civil penalty of $86,877.00. Witherspoon was ordered to pay disgorgement of $42,768.00, prejudgment interest of $7,563.44, and a civil penalty of $48,143.00. All three were permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Named in this action: Jordan Qsar, Austin Bernard, Grant Witherspoon, Chase Lambert.

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