Michael Mindlin didn’t work at Citadel during the period in question.

Hedge fund Citadel issued a statement last week that distanced itself from a former trader who profited from non-public information. Michael Mindlin worked for Citadel between June 2016 and June 2018. However, U.S. regulators just fined him for illegally profiting from tips tied to the Affordable Healthcare Act in 2014. At the time, Mindlin worked for Stelliam Investment Management.

“This matter has absolutely nothing to do with Citadel,” the hedge fund firm said last week. “The person was not employed at Citadel during the relevant time, the trades at issue had nothing to do with Citadel and until today nobody at Citadel was even aware of this inquiry.”

Michael Mindlin Before His Time at the Hedge Fund Citadel

In 2014, Mindlin obtained non-public information from a friend who was an executive at HCA Healthcare Inc. The tip suggested that HCA would have a better performance than it previously forecasted, thanks to the Affordable Healthcare Act.

Mindlin proceeded to purchase 717,500 shares of HCA stock on June 26 and 27 of 2014 for his company, the SEC said. When the stock popped 10% after its July 2014 earnings report, the firm realized gains of more than $3.3 million. The SEC said Mindlin “breached a duty of trust or confidence that he owed to the HCA Executive.”

His former employer also commented on the SEC complaint.

“Stelliam was not aware of the conduct described in the order at the time the SEC found it to have occurred,” Stelliam told Bloomberg. “Subsequent to the time the former employee left the firm for another employment opportunity, the firm was notified of an investigation involving this former employee and cooperated fully with the investigation. Stelliam’s polices prohibited the type of conduct described in the order, and those policies were well understood by everyone who worked at the firm.”

Mindlin did not admit or deny the allegations. He will pay $134,086 in penalties. He will also accept an industry bar, but he can reapply after three years.

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