Key Takeaways
- Arista Networks founder Andy Bechtolsheim reached a settlement with the Securities and Exchange Commission (SEC) on insider trading charges and will pay almost $1 million in penalties, the SEC said Tuesday.
- Officials charged Bechtolsheim with using material nonpublic information concerning the sale of Acacia Communications in 2019 to gain from trading options of Acacia.
- Bechtolsheim settled without admitting or denying charges and will be barred from serving as an officer or director of a public company for five years.
Arista Networks (ANET) founder Andy Bechtolsheim reached a settlement with the Securities and Exchange Commission (SEC) on insider trading charges and will pay nearly $1 million in penalties, the SEC said Tuesday.
Regulators said that on July 8, 2019, when he was chair of Arista Networks, Andy Bechtolsheim received material nonpublic information about the impending acquisition of Acacia Communications through his and Arista’s “longstanding relationship with another multinational technology company that was also considering acquiring Acacia.”
The complaint alleges Bechtolsheim then used accounts of a close relative and an associate to trade options in Acacia. Before the opening of the markets the next day, Cisco Systems (CSCO) announced it would buy Acacia for $70 per share, sending Acacia shares soaring about 35%. The SEC said the transaction netted Bechtolsheim $415,726.
The SEC said Bechtolsheim settled without admitting or denying charges and agreed to pay a penalty of $923,740. He will be barred from serving as an officer or director of a public company for five years. The agreement is still subject to approval from the federal district court for the Northern District of California.
“While the SEC announcement did not involve any trading in Arista securities, Arista takes compliance to the company’s code of conduct and insider trading policy seriously,” Arista Networks said in a statement. "Arista will respond appropriately to the situation."
Shares of Arista Networks finished 2.5% lower Tuesday at $297.83, though they've gained close to 29% so far in 2024.
UPDATE—March 26, 2024: This article has been updated to include additional information from a statement by Arista Networks.
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