Tuesday, May 13, 2014

Insider Trading Tips - It is also a Crime

More hints for avoiding an insider trading charge. According to the SEC, three Qualcomm executives decided to purchase the securities of an acquisition target after reading work emails and discussing the trades by telephone.

Seal of the U.S. Securities and Exchange Commi...The SEC charged three former sales managers at San Diego-based Qualcomm Inc. with insider trading ahead of a major acquisition announcement. As news leaked about the impending acquisition and the two companies subsequently announced it in a joint news release, Atheros' stock price jumped 20 percent. The executive sold their securities to realize quick profits.

Anyone who reads this blog, or who follows insider trading cases knows that this is a classic case of insder trading - assuming the allegations to be true. However, what some folks don't realize, is that it is a crime as well. These defendants are now aware of it - the U.S. Attorney's Office for the Southern District of California today announced criminal charges against two of them.

The SEC alleges that after learning confidentially that Atheros was the target of a Qualcomm acquisition, all three sales managers proceeded to purchase Atheros securities on Jan. 4, 2011. None of them had ever previously traded in Atheros securities. News of the acquisition began leaking out through media reports that same afternoon, and the two companies formally announced the merger agreement on January 5. After selling all of the securities they had purchased, Cohen's illegal trading profits mounted to more than $200,000, and Herman and Fleischli made profits of $30,000 and $3,000 respectively.

The SEC's complaint charges Cohen, Herman, and Fleischli with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions.

For more information: SEC Charges Three Sales Managers With Insider Trading Ahead of Major Acquisition
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