FORTUNE -- John Johnson, the chief investment officer for the $6.5 billion Wyoming Retirement System, today was charged by the Securities & Exchange Commission with participating in a $29 million insider trading scheme. Two other men also were charged by the SEC, in a plot related to the 2008 acquisition of Foundry Networks by Brocade Communications (BRCD).
At the time, Johnson was between jobs. The SEC alleges that he was tipped off about the deal before it was announced, by a California investment advisor named Matthew Teeple who, in turn, learned of the deal from Foundry chief information officer David Riley.
The SEC alleges that Johnson purchased 3,900 Foundry shares via six separate family brokerage accounts while on the phone with Teeple, three days before the merger was publicly announced. He also allegedly purchased 325 Foundry call option contracts via his personal trading account and, once he hung up the phone, sold short 1,200 Brocade shares.
On the day of the deal announcement, Foundry shares rose 32%, and Brocade shares fell 22%. Johnson netted around $136,000 from his trades.
Teeple also allegedly used Riley's information to trade via his hedge fund, generating millions of dollars in profit (and also avoiding millions of dollars in losses, by reversing short positions). Not only on the Brocade acquisition, but also on other nonpublic Foundry situations.
Thomas Williams, executive director of the Wyoming Retirement System, tells Fortune that he was unaware of the SEC's investigation and charges until we called. He said he is relieved that the alleged impropriety occurred before Johnson joined the retirement system in October 2010, but is nonetheless concerned.
"We will review all available information and take the necessary and appropriate steps," Williams said. "Obviously we are concerned with any charges or activities that could besmirch the reputation of the Wyoming Retirement System."
Fortune has reached out to Johnson, but has not yet received a reply.
UPDATE: Wyoming Retirement System has placed Johnson on "administrative review."
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Why did Best Buy stock jump before new takeover news?
FORTUNE -- Best Buy (BBY) stock yesterday opened trading at $11.95 per share. Then it ping-ponged higher throughout the day, before closing 1.92% higher $12.18. Decent day, but nothing too notable. Then came the aftermarket, in which Best Buy shares spiked all the way up to $12.85 at around 5pm.
It wasn't until several hours later that The Minneapolis Star-Tribune reported that Best Buy MOREDan Primack - Dec 13, 2012 10:14 AM ET
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Forcing executives to schedule their trades well in advance won't stop them from taking advantage of bad news.
Correction: 11/30, 3:00 PM.
FORTUNE -- When it comes to insider trading and executives, the market has always responded with a wink and a nod. By definition, every time an executive buys or sells a stock it's insider trading. Do CEOs have information that no one else has about their company? You betcha. Do MOREStephen Gandel, senior editor - Nov 29, 2012 1:32 PM ET
Is there something rotten in Deltek?
FORTUNE -- Deltek Inc. (PROJ) today agreed to be acquired by private equity firm Thoma Bravo for $1.1 billion, or $13 per share.
Here is how the company, which provides software solutions for government contractors, described the pricing:
The $13 per share offer price represents a 7% discount to Deltek's stock price on August 24, 2012 and a 24% premium over Deltek's stock price on June 11, MOREDan Primack - Aug 27, 2012 2:34 PM ET
Baseball great accused of profiting from an illegal tip.
FORTUNE -- Former Baltimore Orioles first baseman Eddie Murray today was charged by the Securities and Exchange Commission with illegally trading on inside information related to a 2009 merger. He also has agreed to settle by paying a $358,151 penalty, compared to the $235,314 he allegedly made off the illegal investment.
The case is related to insider trading charges brought last year against Doug DeCinces, MOREDan Primack - Aug 17, 2012 3:24 PM ET
Another day, another insider trading charge from the SEC.
This one is against Sherif Mityas, a partner and vice president with management consulting firm A.T. Kearney.
According to the complaint, Mityas and his firm were hired by The Carlyle Group in May 2010 to advise on the private equity firm's possible acquisition of NBTY, a publicly-traded manufacturer of vitamins and nutritional supplements. The deal had not yet been announced, and Mityas was bound by signed MOREDan Primack - Mar 15, 2012 12:35 PM ET
Ameriprise rep accused of leveraging info learned via Alcoholics Anonymous.
Insider trading is always about broken confidences, but there are degrees of degradation. The lowest of the low may have come today, when a financial advisor was accused by the SEC of trading on information gleaned through Alcoholics Anonymous.
The accused is Timothy McGee, a registered representative of Ameriprise Financial Services (AMP). According to the complaint, McGee met a senior executive of Philadelphia Consolidated MOREDan Primack - Mar 13, 2012 2:28 PM ET
Three senators explain their votes against a no brainer.
By Tory Newmyer, writer
FORTUNE -- The measure the Senate approved Thursday to ban lawmakers from stock trading on inside information didn't just pass. It waltzed through the chamber, gathering a whopping 96-vote majority in a bipartisan display that's become rare in the extreme these days.
It's no wonder it proved popular: the bill closed a glaring loophole in Congressional ethics rules allowing Members MOREFeb 3, 2012 1:23 PM ET
Preet Bharara isn't The Protester. But he still made the latest cover of TIME Magazine (a sister publication to Fortune).
Bharara is the U.S. Attorney for the Southern District of New York, responsible for a series of insider trading convictions that included hedge fund manager Raj Rajaratnam. From the story, written by Massimo Calabresi and Bill Saporito:
One of Bharara's characteristics is his combination of blue-collar, former mob-prosecutor attitude with an unabashed moralist's talk MOREDan Primack - Feb 1, 2012 5:25 PM ET
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