Court accepts Sun co-founder Andy Bechtolsheim's insider trading settlement

Billionaire Arista chief architect to pay inconsequential sum via SEC

A California federal court has entered a final judgment in the US Securities and Exchange Commission's insider trading case against billionaire Andreas "Andy" Bechtolsheim, co-founder of Sun Microsystems and founder of Arista Networks.

The SEC alleged in a complaint [PDF] filed on March 26, 2024 that in 2019 Bechtolsheim profited illegally from insider knowledge that Cisco was about to buy Acacia Communications, a maker of optical networking gear.

Sun co-founder charged with insider trading


In its insider trading complaint, the government financial watchdog claimed, "Bechtolsheim learned of this material nonpublic information about Acacia’s impending acquisition through his confidential relationship with a multinational technology company that was also considering an acquisition of Acacia."

After supposedly learning of the pending transaction, Bechtolsheim, chief architect at Arista, is alleged to have traded Acadia options contracts in the accounts of an unidentified close relative and an associate just minutes before the market closed on July 8, 2019.

The following day, before the US financial markets opened, Cisco announced it was acquiring Acacia for $70 per share. "That day, Acacia’s stock price increased by 35.1 percent and Bechtolsheim’s trading generated combined profits of $415,726 in the accounts of the relative and associate," according to the complaint.

Without admitting or denying the SEC allegations, Bechtolsheim in March accepted a settlement proposed by the watchdog. Now approved by the court, the deal prohibits Bechtolsheim from serving as the officer or director of a public company for five years and imposes a civil penalty of $923,740. That's about twice what he – allegedly – made through trading Acacia options.

Bechtolsheim, 68, has an estimated net worth of about $18 billion. So the penalty – for nothing anyone has admitted – amounts to roughly 0.005 percent of his assets. For a 68-year-old in the United States with an average net worth of $1,675,214, the proportionally equivalent fine would be $84.

Arista declined to comment beyond confirming that Bechtolsheim remains chief architect at the networking biz. ®

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