Early Google investor accused of insider trading
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Andy Bechtolsheim. Photo: David Paul Morris/Bloomberg via Getty Images.
One of Silicon Valley's most successful founders and investors just got accused of insider trading.
Driving the news: The SEC on Tuesday alleged that Andy Bechtolsheim confidentially learned of Cisco's plans to buy Acacia Communications, shortly before the $4.5 billion deal was announced in 2019, and then traded Acacia options by accessing brokerage accounts of a relative and associate.
- The scheme generated $415,726 in what the SEC refers to as "illegal profits."
- Bechtolsheim agreed to pay a civil penalty of nearly $1 million, without admitting or denying wrongdoing. He also will be barred from serving as an officer or director of a public company for five years.
- The SEC did not make any announcement regarding disgorgement by owners of the two accounts, and declined to comment on if related complaints are in the works.
Why it matters: Bechtolsheim co-founded several tech companies, including Sun Microsystems, Granite Systems, and Arista Networks.
- He also wrote one of the first checks into Google, investing $100,000 before the search giant had even been incorporated, in what was arguably the greatest angel investment of all time.
- His net worth is estimated to be over $16 billion. That means the civil penalty is pocket change. Then again, so would have been a legal fight to save an invaluable reputation.
Zoom in: Bechtolsheim remains "chief architect" at Arista, a publicly traded company worth around $93 billion.
- In a statement, Arista emphasizes that it "takes compliance to the company's code of conduct and insider trading policy seriously [and] will respond appropriately to the situation."
The bottom line: It should be inconceivable that someone so wealthy would do something so reckless for relatively little reward. Except that we've seen it happen time and time again.
Read the SEC's complaint:
