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and has been in business over 15 years.
FORMER PINNACLE DIRECTOR PLEADS
GUILTY TO INSIDER TRADING
Tenn. – October 21, 2016 – Former lead director of Pinnacle
Financial Partners Inc. (“Pinnacle”) and Rutherford County
Attorney, James Cope, 67, of Murfreesboro, Tenn., pleaded
guilty today to insider trading in connection with
Pinnacle’s 2016 acquisition of Avenue Financial Holdings
Inc. (“Avenue”), announced Jack Smith, Acting U.S. Attorney
for the administration of this case.
“Mr. Cope abused his position of trust as a member of
Pinnacle’s board of directors to make a quick profit” said
Acting United States Attorney Jack Smith. “His actions
undermine the investing public’s confidence in our
securities markets. This office will continue to vigorously
investigate and prosecute all manner of securities fraud in
the Middle District of Tennessee.”
“This plea is the outcome of an aggressive investigation by
the FBI and our law enforcement partners into the unfair,
fraudulent and illegal activity of an individual who abused
his position of trust for personal profit,” said Michael T.
Gavin, Special Agent in Charge of the Memphis Division of
the Federal Bureau of Investigation. “Trading on inside
information undermines confidence in our financial markets,
and the FBI will continue to work to detect, disrupt and
dismantle these types of schemes.”
In a parallel case, the United States Securities and
Exchange Commission today announced civil charges against
According to documents filed in this case and statements
made in court, James Cope is a licensed attorney with more
than 20 years of experience as a bank director. Pinnacle is
a publicly-traded bank headquartered in Nashville,
Tennessee. The defendant was a member of the Board of
Directors of Pinnacle, served as Chair of the Pinnacle Board
of Directors Compensation Committee, and had previously
served as Lead Director for Pinnacle.
Pinnacle maintained and enforced a policy prohibiting
insider trading by its employees and directors. Under
Pinnacle’s “Statement of Policy on Prevention of Insider
Trading,” utilization of inside information to transact
personal investment decisions was expressly forbidden.
Pinnacle’s policy specifically stated that “it is illegal to
engage in ‘insider trading,’ which is purchasing or selling
securities when one is in possession of material nonpublic
information relating to those securities.”
In December 2015, executives of Pinnacle and Avenue began
discussions regarding a potential acquisition of Avenue by
Pinnacle. On December 1, 2015, the Executive Committee of
Pinnacle’s Board of Directors, including Cope, was informed
by Pinnacle’s CEO that he had reached out to executives at
Avenue to express interest in a merger between Pinnacle and
In late December 2015, Cope and other Pinnacle directors
were provided certain information in advance of an upcoming
Executive Committee meeting to be held on January 5, 2016.
This material was not publicly available and discussed a
potential acquisition of an unnamed bank. This material also
discussed a potential price per share of $19.00 for the
On January 5, 2016, Pinnacle executives briefed the
Executive Committee on a potential acquisition of Avenue,
using the aforementioned information. Cope was present for
and participated in this meeting. This meeting included
discussion of the proposed Pinnacle/Avenue transaction,
including discussion of financial specifics of the target
acquisition price of $19.00 per share of Avenue stock.
During this meeting, all of the Executive Committee members,
including Cope, stated that they were in favor of Pinnacle
On the same day, after learning the aforementioned
information regarding Pinnacle’s interest and efforts to
acquire Avenue, Copepurchased 6,179 shares of Avenue stock.
The approximate price per share for these purchased shares
was $13.81. Six days later, on January 11, 2016, he
purchased another 4,000 shares of Avenue stock.
On January 29, 2016, after Pinnacle publicly announced its
agreement to acquire Avenue, Avenue’s stock price rose to
$19.24 per share, resulting in an unrealized profit of over
$56,000 for Cope.
According to the terms of his plea agreement, Cope will
serve two years of federal probation, the first nine months
to be served on home confinement. Cope will also pay a fine
of $55,000. Cope will be sentenced by U.S. District Judge
Aleta Trauger on November 14, 2016.
Pinnacle disclosed Cope’s conduct and cooperated fully with
the federal investigation. The investigation did not reveal
any indication of wrong-doing by Pinnacle or any of its
other board members or employees.
The case was investigated by the Federal Bureau of
Investigation, with assistance from the United States
Securities and Exchange Commission’s Atlanta Regional
Office. The case is being prosecuted by Assistant U.S.
Attorney Henry Leventis.
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