Reported by AMANDA GERUT

The U.S. Attorney unsealed an indictment yesterday charging three current and former minor league baseball players with insider trading in Del Taco stock ahead of the fast food chain’s $585 million acquisition by Jack in the Box in 2022.

The three players, Austin Bernard, Jordan Qsar and Grant Witherspoon are connected because Qsar, 28, and Bernard, 27, attended Pepperdine University together and Qsar and Witherspoon, 27, were both drafted by the Tampa Bay Rays in 2018—Witherspoon in the fourth round. They became close friends and roommates, authorities said. Now, all three are facing a battery of charges related to conspiracy and securities fraud and could see 20 years in prison and $5 million in fines, according to the U.S. Attorney’s Office for the Southern District of California. A fourth player, Chase Lambert, who was drafted by the Pittsburgh Pirates in 2018 and also attended Pepperdine with Qsar and Bernard, was named in a Securities and Exchange Commission complaint yesterday. The SEC said the squad made nearly $200,000 from illegally trading.

According to the SEC, outfielder Qsar went home to San Diego in October 2021 during a break from baseball. When he was there, he went out drinking with a friend he knew from Pepperdine who worked in finance at Jack in the Box. At the time, the friend was working on the financial analysis for the California burger chain’s deal to buy Del Taco and talked about it with Qsar, the complaint says, which wasn’t unusual because the two were close and would often discuss romantic relationships and their finances. Qsar in mid-October and late November then bought call options for Del Taco stock, betting that when news of the deal came out it would boost the share price. Qsar also tipped off Bernard, a catcher, first-baseman Witherspoon and second baseman Lambert. Those three then purchased Del Taco call options, the agency said. Qsar texted Witherspoon and another teammate from the Rays, the SEC said, and the three began exchanging texts about buying Del Taco securities.

The SEC said the messages were an attempt to obscure that they were buying the call options because of what Qsar heard from his friend. 

Read full report: https://fortune.com/2024/03/27/baseball-players-del-taco-insider-trading-jack-in-the-box/