On Dec. 11 at the federal courthouse in Central Islip, an indictment was unsealed charging Ken Peterman, the former Chief Executive Officer (CEO) of Comtech Telecommunications Corp. (Comtech), a publicly traded company based in Melville, with insider trading and securities fraud. Peterman was arrested this morning in San Diego and is scheduled to make his initial appearance tomorrow in federal court in the Southern District of California. He will be arraigned in the Eastern District of New York at a later date.

Breon Peace, United States Attorney for the Eastern District of New York and James E. Dennehy, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrest and charges.

“As alleged, the defendant exploited for his own personal benefit confidential information, including derogatory news of his own impending termination, that was meant to be available only for corporate purposes,” stated United States Attorney Peace.  “In doing so before he was shown the door, Peterman breached the trust and confidence placed in him by his former employer and its shareholders.  My Office will vigorously prosecute those, like Peterman, who would seek to enrich themselves at the expense of ordinary investors and the integrity of the securities markets.”

Mr. Peace also expressed his appreciation to the U.S. Securities and Exchange Commission, New York Regional Office for its work on the case.

“Ken Peterman allegedly acted on non-public information of the company’s confidential fiscal reporting and his pending termination to avoid financial repercussions. This alleged attempt at self-preservation exploited a respected position and disrupted public confidence in future financial leadership. The FBI remains committed to apprehending those who fraudulently prioritize personal wealth over adherence to the regulations of our economic system,” stated FBI Assistant Director in Charge Dennehy.

As alleged, Peterman was the CEO and Chairman of the Board of Directors for Comtech.  In his capacity as an officer and director of the company, Peterman obtained material, non-public information concerning the company’s financial performance and internal decision-making.  For example, in early March 2024, Peterman received a confidential briefing from Comtech’s Chief Financial Officer, during which Peterman was informed of an upcoming negative earnings release.  In addition, around the same time, Peterman was informed that, based on an alleged improper relationship with a subordinate employee, Comtech’s Board had resolved to terminate Peterman for cause.  The indictment alleges that on March 12, 2024, shortly after learning of the negative earnings report and his impending ouster, and prior to the public release of such information, Peterman hurriedly sold and/or attempted to sell tens of thousands of shares of Comtech’s stock, which he held in two brokerage accounts.

The charges in the indictment are allegations and the defendant is presumed innocent unless and until proven guilty.  Peterman faces up to 25 years in prison if convicted of securities fraud, and up to 20 years in prison if convicted of wire fraud.

In July 2022, Mr. Peace was selected as the Chairperson of the White Collar Fraud subcommittee for the Attorney General’s Advisory Committee (AGAC).  As the leader of the subcommittee, Mr. Peace plays a key role in making recommendations to the AGAC to facilitate the prevention, investigation and prosecution of various financially motivated, non-violent crimes, including frauds affecting the integrity of the markets, such as those Peterman is alleged to have committed.

The government’s case is being handled by the Criminal Section of the Office’s Long Island Division.  Assistant United States Attorney Anthony Bagnuola is in charge of the prosecution.