Former Corporate Officer Settles Insider Trading Charges
Insider trading has long been a focus of the Commission, a fact well known in the markets and among securities professionals. That fact is also well know among executives at public companies. Nevertheless, the practice has not been eliminated. Indeed, insider trading has been, and is, a staple of the enforcement division. The latest case filed by the agency in this area involved corporate executive, SEC v. Bechtolsheim, Civil Action No., 5:24-cv-01845 (N.D. Ca. Filed March 26, 2024).
Andy Bechtolsheim is the founder of Arista Networks, Inc., a publicly traded firm. He was the chief architect of the firm and served as Chairman and Chief Development officer from October 2008 through December 2023. The company manufactured high-speed optical interconnect products.
In early July 2019 a senior employee of Tech Company A contacted Mr. Bechtolsheim. The two men discussed the fact that the acquisition of Acacia Communications Inc. was imminent. At the time Tech Company A was determining if it should submit a bid to acquire Acacia.
Immediately after the conversation, Mr. Bechtolsheim traded Acacia option contracts in the accounts of a close relative and associate. The trades were placed minutes before market close.
On July 9, 2019, before the market open, Cisco Systems announced it had entered into a definitive agreement to acquire Acacia for $70 per share. The firm’s stock price increased over 35%. Mr. Bechtolsheim had trading profits of over $415,000 in the two accounts in which he traded. The complaint alleges violations of Exchange Act Section 10(b).
Mr. Bechtolsheim settled the action, consenting to the entry of a permanent injunction and the entry of a bar from serving as an director or officer of a public company for five years. He also agreed to pay a penalty of $923,740.
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Former Corporate Officer Settles Insider Trading Charges
Insider trading has long been a focus of the Commission, a fact well known in the markets and among securities professionals. That fact is also well know among executives at public companies. Nevertheless, the practice has not been eliminated. Indeed, insider trading has been, and is, a staple of the enforcement division. The latest case filed by the agency in this area involved corporate executive, SEC v. Bechtolsheim, Civil Action No., 5:24-cv-01845 (N.D. Ca. Filed March 26, 2024).
Andy Bechtolsheim is the founder of Arista Networks, Inc., a publicly traded firm. He was the chief architect of the firm and served as Chairman and Chief Development officer from October 2008 through December 2023. The company manufactured high-speed optical interconnect products.
In early July 2019 a senior employee of Tech Company A contacted Mr. Bechtolsheim. The two men discussed the fact that the acquisition of Acacia Communications Inc. was imminent. At the time Tech Company A was determining if it should submit a bid to acquire Acacia.
Immediately after the conversation, Mr. Bechtolsheim traded Acacia option contracts in the accounts of a close relative and associate. The trades were placed minutes before market close.
On July 9, 2019, before the market open, Cisco Systems announced it had entered into a definitive agreement to acquire Acacia for $70 per share. The firm’s stock price increased over 35%. Mr. Bechtolsheim had trading profits of over $415,000 in the two accounts in which he traded. The complaint alleges violations of Exchange Act Section 10(b).
Mr. Bechtolsheim settled the action, consenting to the entry of a permanent injunction and the entry of a bar from serving as an director or officer of a public company for five years. He also agreed to pay a penalty of $923,740.
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