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A former Federal Reserve Bank of Richmond examiner on Tuesday pleaded guilty to committing insider trading and making false statements about his trading to the Richmond Fed.
Robert Brian Thompson, 43, of Chesterfield County’s Moseley area, was an examiner and senior manager with supervisory duties for the Richmond Fed, where he worked from 2004 through about May 2024. Thompson used confidential information from about seven publicly traded financial institutions that are under the Richmond Fed’s supervision when executing trades from October 2020 to February 2024, according to a news release from the U.S. Attorney’s Office for the Eastern District of Virginia.
In total, he completed 69 trades through seven institutions, reaping approximately $771,678 in profits.
“This was a clear violation of our well-established and well-communicated policies on ethics and conflicts of interest,” Richmond Fed spokesman Jim Strader said in a statement. “We fully cooperated with the authorities who investigated this matter.”
From October 2023 through this January, Thompson allegedly used “material nonpublic information” to trade in stock and options of McLean-based Capital One Financial and New York Community Bancorp, according to court filings from the Securities and Exchange Commission, which filed a civil case against Thompson in early November.
From 2022 until about May, Thompson was the Fed’s deputy central point of contact for large and foreign banking organizations, managing a team that supervised and examined 18 U.S. banking firms with at least $100 billion in total assets.
In October 2023, Thompson received an email from a Federal Reserve colleague with a preview of Capital One’s third quarter 2023 earnings that showed earnings per share results exceeded analysts’ expectations, according to an SEC case filing.
On Oct. 26, Thompson allegedly purchased 7,500 Capital One shares for an average of $90.40 per share. After the market closed that day, Capital One announced its third quarter earnings. When the market closed the following day, Oct. 27, Capital One shares were trading at $97.74 a share.
The SEC alleges that Thompson sold his stock at an average of $100.98 per share, gaining more than $79,300 in profits.
Between Jan. 18 and Jan. 26, Thompson learned through conversations with other Fed staff members that NYCB would be announcing substantial, unexpected losses related to loans it acquired as part of its March 2023 acquisition of Signature Bank, according to the SEC.
On Jan. 29, Thompson purchased 1,600 out-of-the-money put option contracts that expired Feb. 16, which would earn a profit if NYCB’s stock price fell by the expiration date, for a total cost of almost $14,500, according to the SEC.
On Jan. 31, NYCB released its fiscal 2023 earnings results. By close, its shares were trading for $19.41, a 37% drop from its closing price the previous day.
On Feb. 1, Thompson sold his NYCB put options and gained more than $505,500 in profit, the SEC alleges.
According to court filings related to his plea deal, Thompson also made false statements on his 2020, 2021, 2022, 2023 and 2024 Form Ds, annual forms that require employees to disclose whether they have any assets, including any equity invested in any banks that are members of the Fed system and/or bank holding companies. A federal regulation also prohibits Federal Reserve employees from trading in bank securities altogether to avoid conflicts of interest.
A Federal Reserve Board of Governors spokesperson said in a statement: “There is no place at the Federal Reserve for the misuse of confidential information. We have robust safeguards in place to ensure that those who have access to supervisory information understand their responsibilities and obligations, including the outright prohibition on trading in bank stocks. We require regular training, as well as affirmations by our staff that each person understands and is committed to the highest standards of professional behavior.”
Thompson reported in those Form Ds that he had no equities in any publicly traded financial institutions and that he hadn’t engaged in any activity that would constitute conflicts of interest, violations of Richmond Fed policies or violations of law.
As of the date that Thompson filed his fiscal 2023 form, he allegedly held bank stock and options with a market value of more than $500,000, according to court filings in the SEC case.
Thompson is scheduled to be sentenced in U.S. District Court on March 19, 2025, and faces a maximum penalty of 20 years in prison for one count of insider trading and five years in prison for one count of making false statements.
Thompson’s attorneys did not immediately reply to a request for comment.