SEC Ensnares Two in Technology Insider Trading Investigation (ADBE) (INTC)
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The U.S. Securities and Exchange Commission said Wednesday it has charged Matthew H. Kluger and Garrett D. Bauer with insider trading in advance of at least 11 merger and acquisition announcements.
Kluger, formerly of Wilson Sonsini Goodrich & Rosati, and Bauer allegedly did not have a direct relationship with one another, but were linked through a mutual friend. The middleman acted to facilitate the illegal scheme, according to the SEC.
“They plotted to fly under law enforcement radar by using disposable phones to hide their communications, cash withdrawals to obscure the flow of tainted money, and a middleman to conceal Kluger as the secret source of inside information,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Now, those same schemes and devices serve only to make it clear beyond any doubt that Kluger and Bauer were involved in an illegal scheme.”
The three collaborators allegedly structured communications to avoid detection, allowing the middleman to share insider information with Bauer without being able to be linked to Kluger as the source.
Bauer allegedly withdrew hundreds of thousands of dollars from his own bank accounts to kick back to the middleman, who in turn delivered at least $500,000 to Kluger for his role in the activities.
The M&A information traded on included that of Adobe Systems Inc. (Nasdaq: ADBE) acquiring Omniture Inc and Intel Corp. (Nasdaq: INTC) acquiring McAfee Inc.
The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
Kluger, formerly of Wilson Sonsini Goodrich & Rosati, and Bauer allegedly did not have a direct relationship with one another, but were linked through a mutual friend. The middleman acted to facilitate the illegal scheme, according to the SEC.
“They plotted to fly under law enforcement radar by using disposable phones to hide their communications, cash withdrawals to obscure the flow of tainted money, and a middleman to conceal Kluger as the secret source of inside information,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Now, those same schemes and devices serve only to make it clear beyond any doubt that Kluger and Bauer were involved in an illegal scheme.”
The three collaborators allegedly structured communications to avoid detection, allowing the middleman to share insider information with Bauer without being able to be linked to Kluger as the source.
Bauer allegedly withdrew hundreds of thousands of dollars from his own bank accounts to kick back to the middleman, who in turn delivered at least $500,000 to Kluger for his role in the activities.
The M&A information traded on included that of Adobe Systems Inc. (Nasdaq: ADBE) acquiring Omniture Inc and Intel Corp. (Nasdaq: INTC) acquiring McAfee Inc.
The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
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