Financial Crimes Weekly: Insider Trading At Arista, Del Taco; KuCoin In Civil Action Suit

Andreas Bechtolsheim, founder and chief architect of Silicon Valley-based technology company Arista Networks Inc ANET, this week agreed to settle charges of insider trading, paying a civil penalty of nearly $1 million.

The U.S. Securities and Exchange Commission (SEC) alleged that Bechtolsheim misappropriated non-public information regarding the eventual takeover of Acacia Communications.

Bechtolsheim was chair of Arista when he learned of Acacia’s impending acquisition on July 8, 2019.

A rival bidder was believed to have consulted with Bechtolsheim who, upon learning this information, immediately traded Acacia options through the accounts of a close relative and an associate.

The following day, it was announced that Cisco Systems Inc CSCO was to acquire Acacia for $70 per share and Acacia’s share price jumped 35%.

The SEC alleged that Bechtolsheim’s trading generated illegal profits of $415,726 through the accounts of his relative and associate.

Bechtolsheim, without admitting or denying the charges, agreed to a permanent injunction barring him from serving as an officer or director of a public company for five years and to a civil monetary penalty of $923,740.

Also Read: Sam Bankman-Fried Sentenced To 25 Years: Judge Points To Ambition, Political Manipulation

Ball Players’ Call Options For Del Taco Takeover

On Tuesday, the SEC filed insider trading charges against one current and three former minor league baseball players.

The SEC alleged that an employee at Jack in the Box Inc JACK shared information with his friend, former minor league baseball player Jordan Qsar, about his company’s impending takeover announcement of Del Taco Restaurants.

Qsar is then alleged to have purchased Del Taco call options and tipped off his teammates Grant Witherspoon, Austin Bernard and Chase Lambert — each player placed similar call options.

The SEC alleged that Qsar earned around $56,500 in illegal profits, while Witherspoon made around $42,800, Bernard $64,700 and Lambert $25,100.

The market regulator is seeking permanent injunctions, disgorgement of ill-gotten gains and interest and civil penalties against all four defendants.

KuCoin Charged With Operating Illegal Exchange

On Tuesday the Commodity Futures Trading Commission (CFTC) filed a civil action against four entities that collectively operate the Kucoin cryptocurrency exchange, charging them with multiple violations of the Commodity Exchange Act.

The CFTC charged Mek Global Ltd, PhoenixFin PTE Ltd, Flashdot Ltd and Peken Global Ltd with illegally dealing in off-exchange commodity futures and other derivative products without obtaining the appropriate trading registrations with the CFTC, or without implementing required know-your-customer compliance procedures.

Ian McGinley, director of enforcement at the CFTC said: “For too long, some offshore crypto exchanges have followed a now-familiar playbook by offering derivative products and falsely claiming people in the United States cannot use their platforms, when in reality, anyone in the U.S. with commonly used technology can trade without providing basic customer identifying information.”

Kucoin also faces charges from the New York U.S. Attorney’s Office alleging breaches of the Bank Secrecy Act and operating without required authorization.

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