Husbands busted for trading on wives' secretsMarch 31, 2014: 4:30 PM ET
It might be best to keep business and personal separate, at least for two married couples in California.
The Securities and Exchange Commission settled insider trading charges with two men in unrelated cases Monday for acting on confidential information gleaned from overhearing their wives' business calls.
In one case, the SEC alleges that Tyrone Hawk of Los Gatos, California snooped on work calls made by his wife, a finance manager at Oracle, related to her firm's plan to acquire Acme Packet Inc.
Upon hearing the inside tip, Hawk purchased shares of Acme Packet ahead of the $1.7 billion acquisition that was announced in February 2013. Shares of Acme Packet subsequently spiked 23% on the news, and Hawk made roughly $150,000 in profit, the SEC said.
Hawk agreed to pay more than $300,000 to settle the charges -- without admitting or denying guilt.
In the other case, the SEC said that Ching Hwa Chen of San Jose, California gained illicit profits by trading on information regarding the not-yet-public earnings of his wife's employer, Informatica Corp. During a drive to Reno, Nevada for vacation, Chen overheard his wife's business calls discussing the fact that the the Silicon Valley company would miss its quarterly earnings target.
Despite being told by his wife not to trade Informatica stock under any circumstances, Chen bought positions designed to profit from a fall in share price. When shares of Informatica plunged 27% after the earnings release, Chen saw a windfall of $140,000, the SEC alleges.
Chen agreed to pay $280,000 to settle the charges, and also didn't admit or deny the allegations.
"Spouses and other family members may gain access to highly confidential information about public companies as part of their relationship of trust," said the SEC's Jina L. Choi in a press release Monday . "In those circumstances, family members have a duty to protect and safeguard that information, not to trade on it."