Jon P. Kipp, 62, of Kirkland, Washington, had known the chief executive of Funko since high school. They had been college roommates. They spoke by phone, by text and in person. The CEO confided in him about his marriage, asked him for financial advice, and appointed him trustee of a trust established for the CEO’s children. Kipp had also worked at the pop culture collectibles company himself, as an informal adviser from 2005 to 2013 and then as Executive Vice President of Operations from 2015 until he retired in 2018. On July 11, 2023, the CEO texted him about a trip to Montana and mentioned, in the same exchange, that Funko’s board had placed him on a mandatory six-month paid sabbatical and that he intended to leave the company permanently. Two days later Kipp sold all 247,335 Funko shares he owned, for net proceeds of $2,499,527. The following day the stock fell 19 percent. On September 14, 2026, the Securities and Exchange Commission sued him in the Western District of Washington.
The complaint alleges that Kipp avoided approximately $483,746.40 in losses, and charges him with violating Section 10(b) of the Securities Exchange Act and Rule 10b-5. The SEC seeks a permanent injunction, disgorgement with prejudgment interest and a civil penalty. The allegations have not been tested in court.
The Order He Already Had, and the One He Replaced It With
The most damaging fact in the complaint is not that Kipp sold. It is what he did to his existing instructions.
On July 3, 2023, before he knew anything, Kipp told his investment adviser representative to sell all of his Funko shares if the price reached $12. Funko closed that day at $10.09. He added a fallback: if the stock had not reached $12 by July 31, the adviser should sell everything at market on that date. That is an ordinary arrangement. It sets a target, accepts a deadline, and leaves the outcome to the market.
On July 4, the board instructed the CEO to step down and take a mandatory six-month leave. On July 11, the CEO told Kipp. On July 13, at around 9:30 in the morning Pacific time, Kipp telephoned the adviser and changed the instruction. He no longer wanted $12. He no longer wanted to wait until July 31. He wanted everything sold that day at whatever the market would pay.
He sold at an average of about $10.11, roughly two cents above the price that had not been good enough ten days earlier. After the close that same day, Funko announced the CEO’s departure. The next day the stock closed at $8.15, down 19 percent from $10.07.
A Duty That Came From Friendship, Not Employment
Kipp had retired from Funko five years before the trade. He was not an officer, a director or an employee in July 2023, and he had no access to the company’s internal information through any professional channel. That is precisely why the SEC framed the case the way it did.
The misappropriation theory of insider trading reaches anyone who obtains material nonpublic information in breach of a duty of trust and confidence. That duty does not have to arise from a job. It can arise from a relationship in which both people expect what they share to stay private. The complaint sets out the evidence for that expectation in unusual detail: decades of friendship, high school, a shared college room, the CEO confiding about his marriage, seeking Kipp’s financial advice, and naming him trustee for his children’s trust.
A man asked to hold money in trust for another man’s children is not an acquaintance. The SEC used the closeness of the relationship, which is what made the disclosure natural, as the thing that made trading on it unlawful.
He Did Not Mention It
One line in the complaint carries more weight than its length suggests. Kipp did not disclose the July 13 sales to the CEO.
The two men spoke regularly. The CEO had just told him he was leaving the company, in a text message that also arranged a trip to Montana. Kipp liquidated a $2.5 million position in that company two days later and said nothing about it. The omission is not itself a securities violation, but it speaks to whether he understood what he was doing with the information he had been given.
The complaint also notes that Funko maintained an insider trading compliance policy during his tenure as Executive Vice President of Operations, and that the policy specifically identified information concerning management or control changes as material. Kipp was subject to that policy from 2017 to 2018 and, in the SEC’s words, either knew or should have known how it defined material information. A CEO being removed by the board is the textbook example.
What a 19 Percent Drop Costs a Large Holder
The arithmetic explains why the timing mattered so much. Kipp held 247,335 shares. He sold at an average of roughly $10.11, realising $2,499,527. Had he held through the announcement, those shares would have been worth about $2,015,780 at the following day’s close of $8.15. The difference, approximately $483,746.40, is the figure the SEC seeks to recover.
Avoided losses are treated the same as gains in insider trading cases. The prohibition is not concerned with whether a trader made money but with whether they used information others did not have. A holder who escapes a drop has extracted exactly the same advantage as one who captures a rise, and the counterparties who bought his 247,335 shares on July 13 were buying from someone who knew what was coming after the close.
The Pattern in Recent Enforcement
Kipp’s case belongs to a category the Commission has pursued steadily: people who acquire deal or personnel information through a personal relationship rather than a job. The theory requires establishing that both parties expected confidentiality, which is why complaints of this kind read like character studies, cataloguing the history that made the disclosure natural.
The rules on trading while in possession of material nonpublic information extend to spouses, friends, relatives and anyone else who receives it in circumstances implying confidence. A CEO texting an old friend about being removed by the board is not making a disclosure to the market. He is telling someone he trusts.
Conclusion
Jon Kipp set a sell order at $12 on July 3 and was content to wait until the end of the month. Then the man he had roomed with in college, whose children’s trust he administered, told him the board had pushed him out. Two days later Kipp cancelled the $12 order and sold all 247,335 shares at market for $2.5 million. Funko announced the departure after the close that day and the stock dropped 19 percent the next morning. He never mentioned the sale to his friend. The SEC says the friendship was the duty, and that selling on what it produced cost him $483,746.40 he was not entitled to keep.
