For some people, desperate to climb from mere affluence to the ranks of the modestly rich, insider trading must sometimes seem like an easy, victimless crime.
But this is just bizarre:
The Securities and Exchange Commission today announced insider trading charges against Andreas “Andy” Bechtolsheim, the founder and Chief Architect of Silicon Valley-based technology company Arista Networks, Inc . . . .
. . . According to the SEC’s complaint, Bechtolsheim misappropriated material nonpublic information regarding the impending acquisition of Acacia Communications, Inc., a manufacturer of highspeed optical interconnect products. The SEC alleges that Bechtolsheim, who was Arista Networks’s chair at the time, learned of Acacia’s impending acquisition on July 8, 2019, through his and Arista Networks’s longstanding relationship with another multinational technology company that was also considering acquiring Acacia and consulted with Bechtolsheim concerning the potential acquisition. Immediately after learning this information, Bechtolsheim allegedly traded Acacia options in the accounts of a close relative and an associate. The next day, July 9, 2019, before the market opened, Acacia and Cisco announced that Cisco had agreed to acquire Acacia for $70 per share. That day, Acacia’s stock price increased by 35.1 percent. According to the SEC’s complaint, Bechtolsheim’s trading generated combined illegal profits of $415,726 in the accounts of his relative and associate.
Bechtolsheim is a billionaire many times over, having been one of the founders of Sun Microsystems and the first outside investor in Google , his $100k cheque allowing Larry Page and Sergey Brin to move from their dorm room to a garage. Forbes pins his wealth at $8.6bn. His reputation is sterling.
And yet, he seems to have risked jail-time for a paltry $415,726. Even the US watchdog seems to have reacted like this . . .
. . . Because the penalty seems pretty mild given what the SEC implies was a clear case of insider trading, albeit for only modest profit?
Without admitting or denying the allegations in the SEC’s complaint, which was filed in the U.S. District Court for the Northern District of California, Bechtolsheim settled the SEC’s charges by agreeing to be barred from serving as an officer or director of a public company for five years and to pay a civil monetary penalty of $923,740. The settlement is subject to court approval.
Joseph Sansone, head of the SEC’s Market Abuse Unit, said in the watchdog’s statement that “we will continue to pursue and prosecute misconduct by trusted insiders at all levels of the corporate hierarchy.” And then give them a friendly tickle, presumably.