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From Securities Regulation Daily, December 19, 2013

SEC charges Microsoft portfolio manager with insider trading

By Anne Sherry, J.D.

A SEC complaint alleges that Brian D. Jorgenson, a senior portfolio manager at Microsoft Corporation, and his friend and business partner profited by nearly $400,000 by trading ahead of company announcements. The U.S. Attorney’s Office for the district announced that parallel criminal charges have been filed against Jorgenson and Sean T. Stokke. The complaint alleges that Jorgenson tipped inside information to Stokke, who traded on the information and shared the profits with Jorgenson (SEC v. Jorgenson, December 19, 2013).

The complaint describes three instances of insider trading. First, Jorgenson and Stokke allegedly profited by over $185,000 after trading in Barnes & Noble call options prior to the April 2012 announcement that Microsoft would invest in the bookstore’s e-reader and digital media business. In July 2013 and again in October, the defendants traded in advance of Microsoft’s respective earnings announcements, profiting by approximately $208,000. The October trades were allegedly made in options of a fund that held Microsoft stock, in an attempt to conceal the insider trading.

The defendants’ goal was to generate enough profits to start up their own hedge fund, the SEC alleges. In a statement, Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit, pointed out, “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.” The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against both defendants, and an officer-and-director bar against Jorgenson.

The case is No. 13-cv-02275.

Attorneys: John V. Donnelly, III, for the SEC. Brian D. Jorgenson is pro se. Sean T. Stokke is pro se.

Companies: Microsoft Corporation; Barnes & Noble

MainStory: TopStory FraudManipulation WashingtonNews

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