SEC v. Brian D. Jorgenson and Sean T. Stokke, Case No. 2:13-cv-02275 (W.D. Wash.). On December 19, 2013, the SEC announced insider trading charges against Brian D. Jorgenson and Sean T. Stokke. According to the SEC, Jorgenson got confidential information about upcoming company news because he worked in Microsoft’s corporate finance and investments division and tipped his friend Stokke. The SEC alleges that Stokke traded before the public announcement that Microsoft planned to invest $300 million in Barnes & Noble’s e-reader business. Jorgenson learned about the deal and then tipped Stokke so he could buy call options on Barnes & Noble common stock. Jorgenson and Stokke made almost $185,000 in profits. The SEC also alleges that Stokke later traded before a Microsoft earnings announcement. Jorgenson knew that Microsoft would release negative news concerning its earnings and had estimated that its stock price would drop by at least six percent. He tipped Stokke who bought options. After Microsoft announced the negative news, its stock price dropped. Jorgenson and Stokke made more than $195,000 in illicit profits. According to the SEC, Stokke also traded before another Microsoft announcement. Jorgenson knew that the company would announce good earnings results. Rather than buy Microsoft securities himself, Jorgenson and Stokke bought call options on an exchange-traded fund in which Microsoft comprised more than eight percent of the fund’s holdings. After the announcement, Microsoft’s share price increased, and Jorgenson and Stokke made approximately $13,000. Jorgenson and Stokke are charged with violating Section 10(b) of the Exchange Act and Rule 10b-5, both directly and pursuant to 20(d) of the Exchange Act. The SEC seeks injunctions, disgorgement, civil monetary penalties, and an officer-and-director bar against Jorgenson. In a parallel criminal action, the U.S. Attorney’s Office announced criminal charges against Jorgenson and Stokke.
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