Technology Stocks: SEC Cracks Down On Insider Trading
The SEC is going after hedge fund managers for alleged insider trading violations tied to Brocade (NASDAQ:BRCD), Dell (NASDAQ:DELL), Foundry Networks and Nvidia (NASDAQ:NVDA) shares. Heck, even Foundry's former CIO allegedly is caught up in the mess. As the high-tech market undergoes more mergers and acquisitions, can we expect more insider trading allegations? The VAR Guy suspects yes. Here's why.
First, the hard news:
- The Securities and Exchange Commission recently charged Michael Steinberg, a portfolio manager at New York-based hedge fund advisory firm Sigma Capital Management, with trading on inside information ahead of quarterly earnings announcements by Dell and Nvidia. The SEC uncovered an email trail that might be considered a smoking gun in the case.
- Separately, the SEC alleges Hedge Fund Manager Matthew Teeple was tipped in advance of Brocade buying Foundry in July 2008. Teeple’s alleged source was Foundry CIO David Riley, according to this SEC announcement.
- Teeple also tipped a Denver-based investment professional John Johnson, and Johnson made illegal trades based on the nonpublic information, the SEC alleges.
Hmmm… We live in the age of eDiscovery software, Sarbanes-Oxley and tight corporate compliance regulations. As a result, shouldn't insider trading cases in the high-tech market go down rather than up?
Perhaps not. Each day, confidential information from Silicon Valley flows onto the web.
- Anybody else remember how Hewlett-Packard's board leaked a bunch of confidential information — PC strategy, tablet strategy, M&A strategy — to major media outlets in 2012?
- More recently, details about the bidding war for Dell have shown up on the web before the PC giant made any formal announcements.
If top Dell and HP executives — or representatives — can't keep secrets, can Silicon Valley's rank-and-file employees be trusted to remain mum with company secrets? The VAR Guy doubts it…