A North Carolina man likely saved some money by blowing the whistle on himself for insider trading, the Securities and Exchange Commission said Monday.
Charles F. Kerwin, an employee of Cisco Systems, a Silicon Valley-based networking technology company, learned in advance of Cisco's potential acquisition of Acacia Communications, SEC documents say.
Kerwin purchased Acacia stock in advance of the July 9, 2019 acquisition announcement, turning a profit of nearly $95,000, SEC documents said. On July 11, Kerwin reported his Acacia trades to the SEC and cooperated with its investigation.
In the SEC order, Kerwin agreed to pay disgorgement of $94,860 and a civil money penalty of $47,430. In similar insider trading cases, the SEC fine is often equal to the illicit gains.
The commission acknowledged Kerwin's initiative and cooperation in announcing the reduced penalty.
Still, Kerwin "knew or was reckless in not knowing that he owed a duty of trust and confidence to Cisco to refrain from trading in Acacia securities while in possession of the confidential information," the SEC complaint reads.
Months Of Negotiations
Throughout the first half of 2019, the complaint said, Cisco pursued a possible acquisition of Acacia, a Massachusetts-based communications technology company. On June 18, 2019, Cisco increased its offer price to $65.50 per share. A day later, Acacia informed Cisco that its board would accept Cisco’s offer and negotiate final terms, the SEC complaint said.
Kerwin also learned of the deal on June 19, the day he signed a nondisclosure agreement, the complaint said.
"Between July 2 and July 5, 2019, while in possession of material nonpublic information regarding the Acacia acquisition, Kerwin placed a series of bullish trades in Acacia securities," the complaint said.
The day of the announcement, Acacia stock closed at $64.91 per share, a 35% increase from its
$48.06 closing price on the previous trading day.
According to Bloomberg, Cisco acquired Acacia for about $2.6 billion. The move met the technology giant’s desire for expanded technologies to meet customer demand for more robust networks.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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