Two of ex-Qualcomm Inc. sales directors were implicated with 4 rounds of insider trading and were charged with making nearly $230,000 of profit from the trades in Atheros Communications Inc. when this company was bought by Qualcomm in the year 2011.
As per the indictment, Robert William Herman and Derek Montague Cohen, both aged about 52, were directors of the sales Department in Qualcomm’s North American section. Apart from their day jobs, they were active in a trading group that dealt with stocks, opinions and sharing tips regarding the stock market. As per the indictment, while they were still part of Qualcomm, Herman and Cohen came to know about the deal of Qualcomm acquiring Atheros Communications, Inc (ATHR), which was at that time a technology company that was publicly traded and had its headquarters located in California.
Because of this inside information, and only a day prior to the official announcement by Qualcomm regarding the acquisition of the company, Herman and Cohen invested over $500,000in trades with many of Athros securities which also included option contracts and stocks purchases. Around the same time, Cohen purposefully took over a short position that he kept up, which was a violation of the company policy.
Prosecutors informed that Cohen was arrested a couple of day back at the Los Angeles International Airport after he came back from a trip to the Philippines and pleaded innocence during an arraignment hearing on Monday. Herman though has been escaping. The prosecutor added saying that both these men were fired by Qualcomm in the month of September last.
A parallel civil lawsuit was filed against the two and also against a third salesman from Qualcomm, Michael Fleischi. The Securities and Exchange Commission filed a parallel civil lawsuit against both men as well as a third former Qualcomm salesman, Michael Fleischli. The authorities claimed that all three men learned via meetings and emails regarding the acquisition by the San Diego based maker of cell phone technology and chips was intending on acquiring Atheros, a chip manufacturing company.
Laura E. Duffy, an attorney from the United States stated – “Insider trading is a threat to public companies and investors alike. 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.”