The SEC has charged former The Trade Desk executive Jesse R. Mitchell with insider trading before two company earnings announcements. Mitchell allegedly bought 3,850 shares before positive second-quarter results and later purchased 200 out-of-the-money put options before the company's first revenue-guidance miss. The trades allegedly generated more than $338,000 in total profits and occurred during employee blackout periods, with the options transactions also violating The Trade Desk's permanent ban on employee trading in company derivatives.
U.S. Securities and Exchange Commission (SEC)
Official Release:
https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26614
NEWS:
The Securities and Exchange Commission alleges that Jesse R. Mitchell used preliminary financial results obtained through his position as Senior Director of Financial Planning and Analysis at The Trade Desk to profit from both a positive and a negative earnings announcement. The Trade Desk is a digital advertising company whose shares trade on Nasdaq under the ticker TTD. Mitchell worked on cost and revenue modeling, forecasting and other strategic financial initiatives, giving him advance access to preliminary and final quarterly results. The complaint states that Mitchell electronically certified his completion of the company's insider trading training on the day he joined The Trade Desk in June 2024. The company's policy identified earnings and earnings forecasts as material nonpublic information, prohibited employee trading during designated blackout periods and imposed a permanent prohibition on trading company puts, calls and other derivatives. The blackout period began before the end of each fiscal quarter and continued until after the first full trading day following publication of the relevant earnings. The Trade Desk's chief legal officer also allegedly distributed company-wide reminders identifying the blackout dates and attaching the policy.
The SEC describes two different trading strategies based on Mitchell's access to unpublished results. In July 2024, Mitchell allegedly received preliminary second-quarter figures showing revenue of approximately $585 million, above analyst estimates of roughly $578 million. From July 24 through August 7, while the blackout remained in effect, he purchased 3,850 Trade Desk shares through two personal brokerage accounts for approximately $346,538. The company reported its results after the market closed on August 8, and its stock gained more than 12% by the following close. Mitchell allegedly sold the entire position for approximately $366,234, producing a profit of $19,696.11. The second episode involved substantially greater leverage. In January 2025, Mitchell allegedly received preliminary fourth-quarter results showing revenue of approximately $741 million, below previously announced guidance of at least $756 million. The complaint describes this as the first time in The Trade Desk's eight-year history that the company had missed its own quarterly revenue guidance. Between February 7 and February 12, Mitchell purchased 200 out-of-the-money put options for a total cost of $15,618.35. The contracts expired only two days after the scheduled earnings announcement and were at least $17.36 below the market price when purchased, making them a highly concentrated wager on an immediate decline. After The Trade Desk disclosed the guidance miss, its stock fell more than 30%. Mitchell allegedly sold the options for approximately $333,981, generating $318,362.45 in profit. Combined with the earlier stock transaction, the SEC calculates alleged gains exceeding $338,000.
The complaint charges Mitchell with violating Section 10(b) of the Exchange Act and Rule 10b-5 and seeks a permanent injunction, disgorgement with prejudgment interest, civil penalties and an officer-and-director bar. Federal prosecutors separately announced a criminal indictment for securities fraud. Both proceedings involve allegations, and neither the SEC complaint nor an indictment alone constitutes a final determination of liability or guilt. The case does not allege that The Trade Desk failed to adopt an insider trading policy; instead, it shows the limits of relying on training, employee certifications and reminder notices without transaction-level enforcement. Public companies can strengthen earnings controls through mandatory trade preclearance, designated-broker requirements, automated blackout restrictions, reporting of all personal brokerage accounts, surveillance for derivatives linked to company securities and review of trading that follows access to preliminary financial reports. Options deserve particular attention because a comparatively small premium can generate a large return following a sudden earnings-related price movement. Access logs can also help compliance teams compare when an employee viewed draft results with the timing of account funding and trade placement. The allegations demonstrate that positive and negative information create equal risk: an employee may buy shares before favorable news or use puts and other bearish instruments before an expected decline.
KEY POINTS:
- Mitchell allegedly received preliminary quarterly results through his role in The Trade Desk's financial planning and analysis team.
- He allegedly earned $19,696.11 by purchasing 3,850 shares before positive second-quarter 2024 results caused the stock to rise more than 12%.
- Mitchell later allegedly earned $318,362.45 from 200 short-dated put options purchased before a revenue-guidance miss triggered a stock decline exceeding 30%.
- Both sets of transactions allegedly occurred during employee blackout periods, while the options trades also violated the company's permanent derivatives prohibition.
- The SEC seeks disgorgement, penalties, an injunction and an officer-and-director bar, while a parallel criminal indictment remains pending.