Former Long Island CEO charged with insider trading, wire fraud

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The former CEO of a public company in Melville,  who now lives in Encinitas, California, is facing federal charges on insider trading and wire fraud, officials said.

Ken Peterman, the former CEO and chairman of the Board of Directors of Comtech Telecommunications Corp., was slated for an appearance in federal court in the Southern District of California on Thursday. He is to be arraigned in the Eastern District of New York at a future date, according to U.S. Attorney Breon Peace.

Peterman allegedly sold his company shares after he learned of “negative earnings and his own impending ouster,” officials said in a news release about the charges.

“As alleged, the defendant exploited for his own personal benefit confidential information, including derogatory news of his own impending termination, that was meant to be available only for corporate purposes,” Peace said.

“In doing so before he was shown the door, Peterman breached the trust and confidence placed in him by his former employer and its shareholders,” Peace added. “My Office will vigorously prosecute those, like Peterman, who would seek to enrich themselves at the expense of ordinary investors and the integrity of the securities markets.”

LIBN was unable to immediately to reach Terree Bowers, Peterman’s attorney.

Officials said that Peterman allegedly obtained key, non-public information about the company’s financial performance and internal decision-making. They said that in March of this year, Peterman received a confidential briefing from Comtech’s chief financial officer, during which Peterman learned of an upcoming negative earnings release. Around that time, Peterman was also informed that, based on an alleged improper relationship with a subordinate employee, Comtech’s board had decided to terminate Peterman for cause. Peterman is alleged to have then “hurriedly sold and/or attempted to sell tens of thousands of shares of Comtech’s stock, which he held in two brokerage accounts,” officials said.

Peterman faces up to 25 years in prison if convicted of securities fraud, and up to 20 years in prison if convicted of wire fraud.