Former LI Telecommunications Company CEO Charged With Insider Trading: U.S. DOJ

CENTRAL ISLIP, NY — The former CEO of Comtech Telecommunications Corp., a Melville-based publicly-traded company, was indicted in connection with insider trading and securities fraud, the United States Department of Justice announced Wednesday.

Ken Peterman, 67, of Encinitas, California, was arrested Wednesday morning in San Diego, officials said. He is scheduled to make his initial appearance Thursday in federal court in the Southern District of California. He is set to be arraigned in the Eastern District of New York at a later date.

"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," Breon Peace, United States Attorney for the Eastern District of New York, stated in a news release. "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. 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."

Peterman, as the CEO and chairman of the Comtech board of directors, obtained material, non-public information concerning the company’s financial performance and internal decision- making, prosecutors said. In early March 2024, Peterman received a confidential briefing from Comtech’s chief financial officer, during which Peterman was informed of an upcoming negative earnings release, investigators said.

Around the same time, Peterman was informed that, based on an alleged improper relationship with a subordinate employee, Comtech’s board decided to terminate Peterman for cause, the DOJ stated.

On March 12, shortly after learning of the negative earnings report and his impending firing, and before the information was publicly released, Peterman "hurriedly sold and/or attempted to sell" tens of thousands of shares of Comtech’s stock, which he held in two brokerage accounts, prosecutors said.

Peterman's firing was announced by the company approximately a week later.

John Ratigan, chief corporate development officer, was appointed as interim CEO by the board of directors immediately after Peterman's termination.

Comtech Telecommunications Corp. did not immediately respond to Patch's request for comment.

Comtech trades on NASDAQ under the ticker CMTL.

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.

"Ken Peterman allegedly acted on non-public information of the company’s confidential fiscal reporting and his pending termination to avoid financial repercussions," FBI Assistant Director in Charge James Dennehy stated. "This alleged attempt at self-preservation exploited a respected position and disrupted public confidence in future financial leadership. The FBI remains committed to apprehending those who fraudulently prioritize personal wealth over adherence to the regulations of our economic system."