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 Brian Jorgenson, a senior portfolio manager at Microsoft, passed
information to a former colleague, online day trader Sean Stokke,
who executed the trades, according to prosecutors.
According to complaints filed by the department and the SEC, the
scheme began in April 2012 when Jorgenson, 32, found out through his
job in Microsoft's treasury department that the software company was
planning a multi-million dollar investment in the digital business
of bookseller Barnes & Noble Inc <BKS.N>.
He passed that information to Stokke, now 28, who bought options
betting that Barnes & Noble stock would rise. It jumped about 50
percent when the investment was announced in late April, reaping
Stokke profit of more than $184,000, prosecutors said.
Stokke, who had previously worked with Jorgenson at an asset
management company, then shared his profits with him via envelopes
stuffed with $10,000 in cash, according to the charges, which
resulted from probes by the Federal Bureau of Investigation and the
SEC.
The pair repeated a similar process twice more in the following 18
months, prosecutors said, by buying options on Microsoft stock or an
exchange-traded fund prior to earnings that Jorgenson knew would
surprise Wall Street.
Together, the two men took in another $208,000 in profit from the
trades, according to the SEC complaint, which indicated they planned
to start their own hedge fund.
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The Justice Department's insider trading charges are criminal and
could result in up to 20 years in prison and $5 million in fines for
both men. The SEC's charges are civil and call for financial
penalties and the return of illegally gained profit.
"Abusing access to Microsoft's confidential information and
generating unlawful trading profits is not a wise or legal business
model for starting a hedge fund," said Daniel Hawke, chief of the
SEC Enforcement Division's Market Abuse Unit.
Microsoft said it had already fired Jorgenson.
"Our company has zero tolerance for insider trading. We helped the
government with its investigation and terminated the employee," a
Microsoft representative said in an emailed statement. Barnes &
Noble had no comment.
(Reporting by Bill Rigby; editing by
Leslie Gevirtz, Richard Chang and Dan Grebler)
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