The former CEO of a Silicon Valley chip company has been charged with insider trading by the US Securities and Exchange Commission today, for allegedly buying company stock in the midst of confidential merger negotations with STMicroelectronics.
Elias Antoun, former chief of Genesis Microchip, alongside his childhood friend Samir Abed, was named in an SEC complaint (PDF) filed yesterday.
Antoun allegedly purchased Genesis stock in brokerage accounts of a friend and a relative after his company received a confidential letter of intent from STM that it would purchase Genesis at its trading price, which as then $6.64 per share.
The SEC claims that while the companies began negotiating a merger agreement, Antoun purchased 12,250 shares of Genesis stock on multiple occasions November 12, 13, and 19.
Antoun also discussed the merger with his friend Abed several times during merger negotiations, the complaint states.
Abed first purchased 1,000 shares and a total of 30 Genesis call option contracts, giving him the right to purchase 100 shares at a specified price before the contract expired. The day prior to a public announcement of the merger, the SEC claims Antoun telephoned Abed and told him the deal with STM had been finalized. Immediately before the announcement, Abed purchased an additional 10,000 shares of Genesis stock and 70 more call option contracts.
When merger negotiations were closed, STM had agreed to a price of $8.65 per share. STM announced it would acquire Genesis on December 11, 2007. The SEC notes that that day, nearly 15 million shares of Genesis stock traded, with share prices increasing 57 per cent to close at $8.49.
The two men then sold the stock, earning Antoun $33,975 and Abed $51,206, the SEC claims.
Both agreed to settle the allegations without admitting or denying charges. They have agree to pay fines equal to the allegedly ill-gotten gains plus prejudgment interest. ®