An Arkansas man has pleaded guilty to securities fraud after trading on material, nonpublic information that he misappropriated from a senior executive at a publicly traded company headquartered in Idaho, the Justice Department announced.
Douglas Dalton, 48, of Bentonville, Arkansas, admitted to one count of securities fraud stemming from an insider trading scheme involving confidential information he obtained from Michael Smith, the then-President and Chief Operating Officer of Company-1. According to court documents, Dalton and Smith were close personal friends, a relationship that enabled Dalton to gain access to sensitive corporate information.
During a telephone call on July 26, 2024, Smith disclosed to Dalton that Company-1 was about to be acquired by another company at a price of approximately $31 per share. The information was material and had not yet been made public. Given Smith’s senior executive role and their personal relationship, Dalton knew the information was both confidential and obtained in breach of a duty of trust.
Using this nonpublic information, Dalton purchased call options in Company-1 for approximately $19,985.30. After the company’s acquisition was publicly announced on August 7, 2024, Dalton sold those options, realizing a profit of approximately $96,515.44. The transaction yielded a return of nearly 500% on his initial investment.
Dalton pleaded guilty to one count of securities fraud and is scheduled to be sentenced on June 17. In November 2025, Smith also pleaded guilty to the same offense. Both men face a maximum statutory penalty of 20 years in prison. Any sentence will be determined by a federal district court judge, who will consider the U.S. Sentencing Guidelines and other relevant statutory factors.
The case is being investigated by the U.S. Postal Inspection Service Criminal Investigations Group (USPIS-CI). The announcement was made by Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division, U.S. Attorney Bart M. Davis for the District of Idaho, and USPIS-CI Inspector in Charge Eric Shen.
The prosecution is being handled by Trial Attorneys Kyle Crawford and John Liolos of the Criminal Division’s Fraud Section, along with Assistant U.S. Attorney Sean Mazorol for the District of Idaho.
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