DOJ:SEATTLE AREA MEN CHARGED WITH INSIDER TRADING ON MICROSOFT

(The following is a reformatted version of a press release
issued by The U.S. Justice Department and received via
electronic mail. The release was confirmed by the sender.) 
December 19, 2013 
SEATTLE AREA MEN CHARGED WITH INSIDER TRADING BASED ON MICROSOFT
INTERNAL INFORMATION 
Pair Allegedly Made more than $390,000 by Stock Trading on Non-Public Information 
Two Seattle area men were charged today in U.S. District Court
in Seattle with 35 counts of insider trading related to their
purchases and sales of stock options related to Microsoft
Corporation, announced U.S. Attorney Jenny A. Durkan.  One of
the men, BRIAN JORGENSON, 32, of Lynnwood, Washington was
employed as a Senior Manager in Microsoft’s Treasury Group.  The
other, SEAN STOKKE, 28, of Seattle was a day trader who had
previously worked with JORGENSON at an asset management company.
The complaint alleges that the two used non-public information
from JORGENSON’s employment at Microsoft to profit on the
movement of Microsoft stock and the stock of related companies.
The men are scheduled to appear in U.S. District Court in
Seattle at 3:00 this afternoon. 
“For every stock market winner, there is a loser, and trading on
confidential inside information is a cheaters way of gaining at
the expense of others,” said U.S. Attorney Jenny A. Durkan.
“This conduct hurts companies, hurts individuals, and shakes
faith in our financial markets.  We will vigorously investigate
and prosecute this type of conduct.” 
According to the criminal complaint, the men allegedly profited
on three distinct instances of insider information:  Microsoft’s
investment in Barnes and Noble; Microsoft’s failure to meet
earnings estimates in the fourth quarter of fiscal 2013; and
Microsoft’s increased first quarter earnings in fiscal 2014.
The men allegedly shared their profits by STOKKE providing
JORGENSON with envelopes of cash in approximately $10,000
increments. 
Through his employment, JORGENSON became aware in early April
2012 that Microsoft was considering an investment in Barnes and
Noble for its digital and college business.  Beginning April 18
and continuing, phone records show JORGENSON and STOKKE were in
frequent contact.  STOKKE opened an online options account and
on April 20, 2012 began accumulating options on Barnes and Noble
stock.  On April 30, Microsoft announced the investment in
Barnes and Noble, and the Barnes and Noble stock jumped 49%.
STOKKE sold all his options that day for a profit of more than
$184,000. 
In early July 2013, JORGENSON learned through his employment
that Microsoft would not meet its earnings estimate.  Phone
records show his contact with STOKKE.  Beginning in mid-July,
STOKKE bought “put” options on Microsoft stock - essentially
betting it would go down.  When Microsoft announced the lower
than expected earnings on July 18, the stock did drop and the
“put” options resulted in a profit to the two men of more than
$195,000. 
The final instance of insider trading charged in the complaint
relates to trading in advance of the announcement of better than
expected first quarter 2014 earnings.  In October 2013, because
of his employment, JORGENSON learned that Microsoft would
announce a 17 percent increase in earnings per share over the
prior year.  One day before the announcement, STOKKE used
brokerage accounts controlled by the two men to purchase call
options of a technology sector fund that is influenced by the
price of Microsoft stock.  Following the earnings announcement,
Microsoft stock and thus the sector fund went up.  The men
executed their options and sold the shares for a profit of
nearly $13,000. 
“The high density of publicly traded companies in Seattle
affords a large number of people access to insider information
that can unfairly benefit their investment decisions,” said FBI
Special Agent-in-Charge Laura M. Laughlin of the FBI Seattle
field office.  “While most employees will never exploit that
knowledge, our FBI office is particularly attentive to
uncovering when and where this type of fraud occurs.  We have
seen many types of schemes and evasion techniques by inside
traders, but they all share an erroneous belief that they’ll
never be caught.” 
JORGENSON is no longer employed by Microsoft. 
Insider trading is punishable by up to 20 years in prison and up
to a $5,000,000 fine. 
The Securities and Exchange Commission (SEC) is also filing a
civil action against the men today. 
The case was investigated by the FBI and the SEC.  The case is
being prosecuted by Assistant United States Attorney Katheryn
Kim Frierson. 
Press contact for the U.S. Attorney’s Office is Emily Langlie at
(206) 553-4110 or Emily.Langlie@usdoj.gov. 
Press contact for the SEC on this case is Kevin Callahan at
(202) 551-4120 or Callahank@sec.gov . 
(bjh) NY 
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