Meanwhile, in the land of SEC complaints:
The Securities and Exchange Commission today charged a senior portfolio manager at Microsoft Corporation and his friend and business partner with insider trading ahead of company announcements.
The SEC alleges that Brian D. Jorgenson, who lives in Lynwood, Wash., obtained confidential information about upcoming company news through his work in Microsoft’s corporate finance and investments division. Jorgenson tipped Sean T. Stokke of Seattle in advance of the Microsoft announcements, the most recent occurring in October. After Stokke traded on the inside information that Jorgenson provided, the two equally split the illicit profits in their shared brokerage accounts. They made joint trading decisions with the goal of generating enough profits to create their own hedge fund.
In a parallel action, the U.S. Attorney’s Office for the Western District of Washington today announced criminal charges against Jorgenson and Stokke.
“Abusing access to Microsoft’s confidential information and generating unlawful trading profits is not a wise or legal business model for starting a hedge fund,” said Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit and director of the SEC’s Philadelphia Regional Office. “We thwarted the misguided plans of Jorgenson and Stokke as they sought to illegally profit at others’ expense.”
GUYS, haven't you learned yet that it is a really bad idea to take advantage of your position within a company for your own personal gain?
According to the SEC complaint, these guys made off with $393,125 in ill-gotten gains from April 2012 to October of 20131. The SEC alleges that it all started when Stokke got ahead of Microsoft's announcement that it would sink $300 million into Barnes & Noble’s e-reader business, bought a few call options — like $14,000 worth — and walked away with nearly $185,000 when Barnes & Noble stock shot up 51.68 percent following the public announcement.
What could possibly go wrong? Might as well do it again!
So they did (allegedly), this time ahead of Microsoft’s fourth-quarter earnings announcement in July 2013. As part of his job, Jorgenson prepared a written analysis of how the market would react to the negative news that Microsoft’s fourth quarter earnings were more than 11 percent below consensus estimates. He estimated that Microsoft stock would go down by at least six percent, let his pal Stokke know and BAM sure enough, Stokke (allegedly) walked away with $195,000 on $50,000 in options. Brill!
Jorgenson and Stokke are charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, both directly and pursuant to 20(d) of the Exchange Act.
If there were an SEC violation for being clowns, surely they'd be charged with that as well. Allegedly.
1 INNOCENT UNTIL PROVEN GUILTY, obvs, in case you didn't get that after the first few uses of "allegedly"
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