Two charged with huge insider trading in tech deals

Apr 06, 2011
A person walks along Wall Street in the financial district in New York. A corporate attorney and a Wall Street trader used insider information to earn millions dealing in the stocks of some of the biggest tech-sector M&A deals in the past five years, the government said Wednesday.

A corporate attorney and a Wall Street trader used insider information to earn millions dealing in the stocks of some of the biggest tech-sector M&A deals in the past five years, the government said Wednesday.

The Securities and Exchange Commission alleged that lawyer Matthew Kluger and Garrett Bauer netted $32 million from a trading scheme based on illegal tip-offs about mergers and acquisitions involving Intel, Hewlett-Packard and Oracle.

"This case involves a longstanding serial insider trading ring that made at least $32 million in illegal profits," the SEC said in its complaint.

According to the SEC, Kluger, who worked for a leading law firm advising in the high-tech sector, accessed and then passed confidential information through an intermediary to Bauer between April 2006 and March 2011.

The information related to some of the biggest deals in technology: Intel's 2010 takeover of McAfee, Hewlett-Packard's 2009 acquisition of 3Com and Oracle's buyout of Sun Microsystems in the same year.

The pair used public and disposable phones to avoid detection. The middleman was not identified in the complaint.

"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 enforcement division, said in a statement.

"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."

Kluger, formerly with the law firm Wilson Sonsini Goodrich & Rosati, which has a focus on M&A activities, and Bauer have since been arrested.

The SEC said its investigation was continuing.

An SEC spokeswoman refused to comment on the middleman's identity or role in the prosecution of the case.

Explore further: The New York Times to cut 100 newsroom jobs

add to favorites email to friend print save as pdf

Related Stories

Satyam to pay $10 million to settle SEC charges

Apr 05, 2011

Satyam Computer Services has agreed to pay $10 million to settle US charges that former top managers inflated the Indian company's revenue, the US Securities and Exchange Commission said Tuesday.

Dell Inc. paying $100 million in SEC deal

Jul 23, 2010

(AP) -- Computer maker Dell Inc. is paying $100 million to settle civil charges that it fraudulently used payments from Intel to pump up its profits to meet Wall Street targets over five years, the government announced Thursday.

AXA firms to pay $242 mn over program glitch

Feb 03, 2011

The US computer-based investment branch of the French AXA group will pay $242 million in compensation and fines after hiding a program glitch that cost investors millions, the SEC said Thursday.

SEC files against former vidgame exec

May 19, 2006

The U.S. Securities and Exchange Commission this week charged a former chief executive officer of Infinium Labs for his role in a fraudulent junk fax scheme.

SEC drops options case vs former McAfee lawyer

Mar 19, 2009

(AP) -- The Securities and Exchange Commission says it has dropped its lawsuit against McAfee Inc.'s former general counsel which accused him of illegally tampering with stock options.

Recommended for you

The New York Times to cut 100 newsroom jobs

4 hours ago

The New York Times Co. says it is cutting about 100 newsroom jobs through buyouts and layoffs in an effort to trim costs and focus more on its digital efforts.

What's PayPal's first solo move?

23 hours ago

PayPal's impending split from long-time partner eBay Inc. will ratchet up its appeal to online retail competitors such as Amazon.com and give it the freedom to aggressively take on new mobile pay challeng ...

AOL to feed more video, news to Microsoft's MSN

Sep 30, 2014

AOL will provide Microsoft's MSN with more video and additional news stories from popular sites such as The Huffington Post and TechCrunch in an expansion of a deal aimed at selling more digital advertising.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

Cynical1
not rated yet Apr 07, 2011
32 million?!?! Are you kidding? That's lunch money for some of the robber baron crooks on Wall St. If these guy s had gotten away with a billion they might not be in trouble and they'd be called savvy investors by the same people who arrested them...