A former Oracle vice-president has stumped up $200,000 to settle insider trading charges.
Christopher Balkenhol, 40, of San Mateo, California, allegedly learned about secret merger negotiations from his wife, the lead executive assistant to Oracle chief exec Larry Ellison and two co-presidents, before buying stocks in Oracle acquisition targets in the expectation their valuation would rise.
Balkenhol's first profitable trade was made when he invested $85,000 in Minneapolis-based Retek the day after Oracle execs started sizing up the firm for an acquisition. A week later Oracle announced an offer, Retek's stock price jumped, and Balkenhol sold his holding for a gain of $15,000.
This pattern of insider trading allegedly continued with purchases of stock in Siebel stock during Oracle's negotiations to acquire the company in 2005. Balkenhol invested $448,000 in Siebel, prior to Oracle announcing plans to buy the CRM giant, and sold at a profit of $82,000.
These trades became the subject of a complaint against Balkenhol by the Securities and Exchange Commission. The Commission does not allege that Balkenhol's wife, who had access to the schedules of top Oracle execs, knew about Balkenhol's illicit trades. Rather the complaint alleges that Balkenhol breached a duty not to misuse confidences gleaned from his wife.
Without either admitting or denying any wrongdoing, Balkenhol has agreed to pay a total of approximately $198,000 — including a penalty charge of $97,000 and $4,000 in interest.
"Combating trading ahead of mergers and acquisitions is among the Commission's highest priorities," said Linda Chatman Thomsen, the SEC's director of enforcement. "This case adds to a growing list of recent SEC enforcement actions against corporate employees and securities industry professionals for trading on information about upcoming corporate transactions that they knew to be confidential.
"Illegal insider trading undermines the level playing field that is the hallmark of our capital markets and the SEC will continue to pursue these matters vigorously," she added. ®