Andreas “Andy” von Bechtolsheim, co-founder of Arista Networks Inc., speaks during an interview on Bloomberg Television West in San Francisco, May 2, 2013.
David Paul Morris | Bloomberg | Getty Images
Andy Bechtolsheim, co-founder of Sun Microsystems and , has reached a settlement with the U.S. Securities and Exchange Commission over insider trading charges that may cost him nearly $1 million and bar him from serving as an officer or director of a public company for five years.
The civil charges announced Tuesday against Bechtolsheim, whose net price is estimated at greater than $16 billion, are related to the corporate’s 2019 acquisition of Acacia Communications. SEC alleged that Bechtolsheim confidentially learned of the “impending takeover” on July 8, 2019, and sold options on Acacia, netting him “aggregate illegal gains” of greater than $415,000 after the transaction was made public the subsequent day.
Cisco announced its agreement to purchase networking company Acacia for $70 a share in a deal valued at $2.6 billion, sending Acacia shares up 35%. The transaction has ended close in 2021 at $115 per share, for a complete price of $4.5 billion.
The criticism filed Tuesday in federal district court in San Jose, California, alleges that Bechtolsheim, then president and chief development officer of Arista, learned that the Acacia acquisition was imminent from an worker of a separate, unnamed multinational technology company. According to the lawsuit, the worker consulted with Bechtolsheim regarding the corporate’s potential bid to accumulate Acacia.
According to the lawsuit, immediately after the discussion, Bechtolsheim transacted stock options on the brokerage accounts of an in depth relative and business associate.
“Bechtolsheim knew or acted recklessly in failing to know that the information he had obtained regarding the impending acquisition of Acacia was material and non-public,” the criticism alleged. “Bechtolsheim also knew or acted recklessly in failing to know that he had a duty of trust and confidence to maintain the confidentiality of such information and not to trade in Acacia securities in reliance on that information.”
The SEC found that Bechtolsheim resolved his allegations without admitting or denying the allegations against him. He agreed to pay a nice of $923,740.
Bechtolsheim, 68, resigned as Arista’s president and chief development officer in December, but continues to function Arista’s chief architect. He is the corporate’s largest shareholder with stakes price almost $14 billion.
“While the SEC announcement did not involve any trading in Arista securities, Arista takes seriously compliance with the company’s code of conduct and insider trading policy,” an Arista spokesperson told CNBC in an email. “Arista will respond appropriately to the situation.”
Bechtolsheim’s lawyers didn’t reply to CNBC’s request for comment.
Bechtolsheim, who lives in Incline Village, Nevada, co-founded Arista in 2004 and took it public a decade later. The market value of this network solutions provider is currently near $95 billion.
In 1982, Bechtolsheim founded Sun Microsystems with Scott McNealy, Vinod Khosla, and Bill Joy and served as chief hardware designer. announced his $7.4 billion acquisition Sun Microsystems in 2009
