The Securities and Exchange Commission (SEC) today announced insider trading charges against Andreas “Andy” Bechtolsheim, the founder and chief architect of technology company Arista Networks, Inc. based in Silicon Valley. nearly $1 million.
According to the SEC’s complaint, Bechtolsheim misappropriated material non-public information regarding its impending acquisition of Acacia Communications, Inc., a manufacturer of high-speed optical interconnect products.
The SEC alleges that Bechtolsheim, who was then chairman of Arista Networks, learned of the impending acquisition of Acacia on July 8, 2019, through his and Arista Networks’ longstanding relationship with another multinational technology company that was also considering acquiring Acacia and advised Bechtolsheim on the potential acquisition. Immediately after learning this information, Bechtolsheim allegedly traded Acacia rights to the accounts of a close relative and 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. On that day, Acacia’s share price rose 35.1%. According to the SEC complaint, Bechtolsheim’s trades generated a combined $415,726 in illegal profits in his relative’s and associate’s accounts.
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 pay a civil monetary penalty of $923,740. The settlement is subject to court approval.