Trader Misused Confidential Information Gleaned From Spouse, Who Was Lead Executive Assistant to Oracle’s CEO and Co-Presidents
Washington, D.C., May 14, 2007 – LAWFUEL – The Law Newswire – The Securities and Exchange Commission today filed insider trading charges against a former Oracle Corporation vice president who allegedly traded on confidential information about Oracle acquisition targets gleaned from his spouse, who was also employed by Oracle. The Commission alleges that Christopher Balkenhol, 40, of San Mateo, Calif., learned about secret merger negotiations from his wife, who worked at Oracle as the lead executive assistant to Oracle’s CEO and two co-presidents. Without admitting or denying the Commission’s allegations, Balkenhol agreed to settle the action against him, paying a total of approximately $198,000—including a penalty of nearly $100,000.
The Commission’s complaint, which was filed in the United States District Court for the Northern District of California, alleges that Balkenhol traded in a series of Oracle acquisition targets during 2004 and 2005. Balkenhol allegedly learned about the planned acquisitions from his wife, who had access to the schedules of Oracle’s three top executives and was aware of significant merger-related meetings. The Commission does not allege that Balkenhol’s wife knew about Balkenhol’s illicit trades. Rather, the complaint alleges that Balkenhol breached a duty not to misuse confidences gleaned from his wife for his own gain.
The SEC’s Director of Enforcement, Linda Chatman Thomsen, said, “Combating trading ahead of mergers and acquisitions is among the Commission’s highest priorities. 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.”
Helane L. Morrison, Regional Director of the Commission’s San Francisco Regional Office, added, “Spouses and close family members of highly-placed corporate employees will sometimes learn important information about the company that they know is confidential. In these situations, the family members have a duty to refrain from using the information for personal gain in the stock market.”
The complaint alleges that Balkenhol engaged in pattern of insider trading by purchasing stock in Oracle acquisition targets before any public announcement of Oracle’s interest. Balkenhol’s first profitable trade came on March 1, 2005, when he invested $85,000 in Minneapolis-based Retek Inc. the day after Oracle executives began considering a tender offer for Retek. When Oracle announced the tender offer the following week, Retek’s stock price jumped and Balkenhol sold the shares for approximately $15,000 in alleged unlawful profits.
Balkenhol allegedly continued his pattern of insider trading with a series of stock purchases in another acquisition target, Siebel Systems, Inc., during Oracle’s negotiations to acquire the company in 2005. On June 9, 2005, the day after Oracle’s two co-Presidents secretly met with Siebel’s CEO to initiate merger discussions, Balkenhol bought over $270,000 worth of Siebel’s stock. Over the next three months, Balkenhol made three additional purchases of Siebel stock, each following a critical advance in the confidential negotiations. Again, Balkenhol’s wife had access to detailed inside information relating to each such advance. From June to September, Balkenhol ultimately purchased over 50,000 shares of Siebel stock for a total of approximately $448,000. Immediately after Oracle’s Sept. 12, 2005, announcement of its acquisition of Siebel, Balkenhol sold his entire position for approximately $82,000 in unlawful profits.
The total of approximately $198,000 Balkenhol agreed to pay in settlement of the Commission’s action includes $97,282 in disgorgement, $4,115 in prejudgment interest and a $97,282 civil penalty.
The Commission acknowledges the assistance of the National Association of Securities Dealers (NASD) in this matter.
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For further information contact:
Helane L. Morrison
Michael S. Dicke
Assistant Regional Director
San Francisco Regional Office
U.S. Securities and Exchange Commission