A longtime friend of the general counsel of Cintas Corp. has agreed to pay more than $250,000 to settle allegations that he peeked at confidential merger documents while staying at the GC's house and used what he learned to perpetrate an insider trading scheme.

The U.S. Securities and Exchange Commission alleged in a complaint in the U.S. District Court for the Southern District of Florida that Brett Fettner discovered that Cintas was poised to merge with G&K Services Inc. in what would be a $2.2 billion deal while he was lacing up his golf shoes in the GC's den before a charity golf tournament in Cincinnati.

The GC is not identified in the SEC's complaint. But Tom Frooman has served as the GC, senior vice president and secretary of Cintas since December 2001.

“While there [in the den], Fettner saw the folder with the merger documents on the desk and read at least some of the draft nondisclosure agreement between Cintas and G&K,” the SEC states in its complaint. “Fettner said nothing to his friend about having seen the merger documents in his house, and the two left for the golf course.”

Later that same day, Fettner bought 4,000 shares of G&K stock with a brokerage account for his ex-wife, the SEC alleges. Over the next few weeks, Fettner allegedly bought 3,600 more shares of G&K stock with his ex's account; picked up another 200 shares using his former girlfriend's account; and persuaded his current girlfriend to buy 300 shares of the stock and his father to buy 2,000 shares.  

Fettner's attorney, James Sallah of Boca Raton, Florida, wrote in an email that his client was “pleased to have resolved this matter with the  SEC in an amicable manner, and to have it behind him.”

Fettner appears to be a prominent Nevada sports agent who, according to the Las Vegas Review-Journal, built a $4 million custom home in 2016, the same year that he allegedly carried out the insider trading scheme. According to the SEC, Fettner and Cintas' GC attended middle and high school together and remained close into adulthood.

Cintas spokeswoman Michelle Goret wrote in an email that the Cincinnati-based uniform and commercial supplies company “takes our confidentiality obligations very seriously and took all reasonable steps to protect confidential information around the acquisition of G&K.”  

“This complaint is the result of a third party obtaining information about that transaction in an inappropriate and illegal manner without the knowledge of any Cintas officer or employee,” she added.

After the Cintas-G&K merger was announced in August 2016, G&K stock appreciated by nearly 18%, jumping from $82.30 to $96.70 a share, which amounted to at least $250,000 in illicit profits stemming from Fettner's alleged unlawful trades.

Fettner agreed to pay a $252,995 penalty to settle with the SEC without admitting or denying the allegations in the complaint. His ex-wife, Liselotte Sandberg, and his former girlfriend, Kathy Micali, who are named as relief defendants, consented to the entry of final judgment and agreed to disgorge their alleged illicit profits with prejudgment interest.  

In announcing the settlement, which is pending court approval, Carolyn Welshhans, associate director of the SEC's enforcement division, stated, “Those who illegally use confidential information to financially benefit others will be held liable for their misconduct.”

“The penalty in this action takes such improper trading profits into account,” she added.

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