According to a statement released yesterday by the US Attorney's Office in San Diego, two former Qualcomm Inc sales directors had been filed with insider trading charges after allegedly profiting $230,000 in illicit traders in Atheros Communications Inc after its ex-employer had bought the company out in 2011.
52 year-olds Derek Cohen and Robert Herman were slapped with four counts of securities fraud, Bloomberg said. The two purportedly invested over half a billion dollars in Atheros stock and options after they found out that Qualcomm would be buying the company out. The acquisition were made prior to the announcement of the $3.2 billion acquisition, said prosecutors.
US Attorney Laura Duffy said about the charges filed against the two, "This indictment should send a message throughout Southern California and beyond: The Department of Justice will not tolerate the manipulation of the securities markets for cynical and selfish personal gain."
Bloomberg noted that the Securities and Exchange Commission had also filed a parallel complaint against the two and four other ex-Qualcomm salesmen. According to Cohen and Herman, they had told the company in an internal probe regarding suspected insider trading related to the Atheros deal that they have learned the proposed acquisition from a story run by The New York Times. The SEC said Qualcomm subsequently fired the two in September.
Cohen was arrested following his return from a trip to the Philippines at the Los Angeles International Airport three days ago, and had since pleaded not guilty to all of the charges against him at an arraignment hearing. Prosecutors said Herman is currently at large.
Spokeswoman Christine Trimble for the San Diego-based company said yesterday in an e-mailed statement, "The defendants named in the complaint are no longer employed by Qualcomm. We have been fully cooperating with the government's investigation and these matters will now be addressed through the legal system."
