Rockville Company, SEC Reach $300,000 Settlement

The Securities and Exchange Commission accused a Rockville-based Institutional Shareholder Services with failing to protect shareholders from an employee who shared private information in exchange for meals, concert and sports tickets and an airline ticket, the SEC announced Thursday.

In a settlement reached with the SEC, investment advisers Institutional Shareholder Services (ISS) agreed to pay $300,000 and must hire an independent compliance consultant, according to SEC records.

The SEC claims the fraud occurred between 2007 through 2012, when an ISS employee leaked information on how more than 100 of ISS’s shareholders planned to vote their proxy ballots, the federal records show.

In exchange, the employee received $11,500 in sports and concert tickets and $20,000 worth of meals for the employee and his family and the airline flight. The records allege:

“In one instance, the proxy solicitor asked for voting information and the ISS Employee responded that it would ‘cost you another game,’ and there were other times that the ISS Employee told the proxy solicitor that his requests for voting information would ‘cost’ the proxy solicitor.”

The SEC claimed that while ISS’s parent company, MSCI, had a written policy prohibiting ISS employees from receiving gifts, ISS failed to provide adequate training and didn't take steps to determine whether its policy was being breached.

A company spokeswoman told The Gazette, which reported the story Tuesday, that the fine was the first in the company’s history.