Billionaire Andreas Bechtolsheim, the cofounder of Arista Networks, agreed Tuesday to settle charges filed by the Securities and Exchange Commission, which alleged the tech executive benefitted from insider trading during Cisco System’s multi-billion-dollar offer for Acacia Communications in 2019.
Bechtolsheim learned of Cisco’s proposal to buy Acacia from an unnamed employee of another unspecified tech firm, before Bechtolsheim purchased Acacia stock options through brokerage accounts owned by a relative and an associate, the SEC alleged.
After Cisco’s offer for Acacia was announced the following day, Bechtolsheim profited more than $415,000 after Acacia’s stock price rose by over 35%, according to the agency.
Bechtolsheim—who neither denied nor admitted to the claims—immediately settled the SEC’s charges and agreed to pay a $923,740 fine within 30 days, according to another court filing.
The SEC will also prohibit Bechtolsheim from serving as an executive or board member for any public company for five years.
Bechtolsheim’s attorney did not immediately respond to a request for comment.
Bechtolsheim and his family have a net worth of $16.4 billion, according to our latest estimates. Bechtolsheim, who earned a portion of his fortune from an early investment in Google, cofounded the tech hardware firm Sun Microsystems in 1982. Oracle acquired Sun in 2010 for $7.4 billion.
Cisco reportedly offered to acquire Acacia, an optics technology company, for $2.6 billion in 2019. Acacia terminated that deal in 2021 after it said the merger failed to gain regulatory approval from Chinese officials in time. A court subsequently blocked Acacia’s termination of the deal, after attorneys for Cisco successfully argued Acacia wanted out of the merger because its valuation had increased. Following another series of negotiations, Cisco acquired Acacia for $4.5 billion.
Bechtolsheim is the latest billionaire who faced charges of insider trading this year. Joe Lewis, whose family was the majority owner of the Tottenham Hotspur soccer team, pleaded guilty in January to one count of conspiracy to commit securities fraud and two counts of securities fraud after prosecutors said Lewis benefitted from insider information. Lewis’s personal pilot, Damian Williams, pleaded guilty to insider trading in February after using insider information provided by Lewis.
Sun Founder Bechtolsheim Insider-Traded On Tech Deal, SEC Claims (Bloomberg)
