The US Securities and Exchange Commission has filed cases against two separate individuals who had followed on their wives' confidential information about the latter's companies and traded them for their own benefit.
Bloomberg said 61 year-old Ching Hwa Chen of San Jose, California had bought options of his wife's company and sold them short. Chen's wife works as a senior tax director for Informatica Corp and at one time overheard her talking about the possibility that her company might miss its forecasts in June 2012. According to the complaint filed by the SEC, Chen's trades using his wife's information had allowed him to profit $138,000 when Informatica didn't make its forecast. SEC also claimed that Chen's wife has already warned him to not trade the shares under any circumstances. In a bid to settle the lawsuit filed by the SEC, Chen agreed to pay $280,523 to the commission, but did not admit to any wrongdoing.
In another SEC complaint, 46 year-old Tyrone Hawk of Los Gatos, California was accused of selling Acme Packet Inc shares after overhearing from his wife that her company, Oracle Corp, is in discussions to acquire the former in February last year. Hawk's wife, who is a finance manager at Oracle, had advised him to not trade on shares based on the information he was able to obtain as she warned there was a blackout in trading Oracle securities as the process of the acquisition was ongoing at that time. Hawk had not followed his wife's advise and managed to pocket $151,480 from selling sales of Acme. Like Chen, Hawk is set to pay $305,614 to settle the filed against him by the SEC.
Bloomberg said the men's wives were not named in the lawsuit or in any legal action for improper conduct.
Under SEC rules over insider trading, it is said that spouses have a duty of confidence when learning confidential information. Director Jina Choi of the SEC's regional office in San Francisco added, "Family members have a duty to protect and safeguard that information, not to trade on it."
