The Securities and Exchange Commission on Friday lost its third insider trading trial of the year and its second in the space of seven days when a federal jury found former sTec Inc co-founder and chief executive Manouchehr Moshayedi not liable for trading on non-public information, Reuters reports.
The case against Moshayedi was one of the largest U.S. insider trading enforcement actions to go to trial. The lawsuit against Moshayedi, filed in 2012, alleged that he and his brother Mark had planned to sell a large percentage of stock holdings in sTec back in 2009 to coincide with the release of the company’s second-quarter results.
According to the SEC, prior to the offering, Moshayedi found out that demand from the company’s largest customer, EMC Corp, for its flagship flash memory products was much lower than anticipated and that EMC was not intending to renew a $120 million supply contract. Instead of cancelling the stock sale, Moshayedi allegedly made a secret side deal with EMC and continued with the sale, netting the brothers around $260 million between them.
“We respect the jury’s verdict but will continue to aggressively enforce the law when we believe the evidence supports the allegations,” a spokesman for the SEC said in a statement, according to the Wall Street Journal.
One week earlier a jury of five men and five women in Manhattan federal court cleared Wynnefield Capital Inc.’s Nelson Obus of insider trading accusations. The SEC, which first filed suit against Obus in 2006, claimed he used an illegal merger tip to reap $1.3 million in 2001, the New York Times reports.
Back in October 2013 a jury in Dallas cleared Mark Cuban, the billionaire owner of basketball team the Dallas Mavericks, of engaging in insider trading in 2004, Bloomberg reports.
The SEC did, however, claim a victory in Manhattan last month against Michaels Stores Inc. founders Samuel and Charles Wyly, who had been accused of concealing their stock holdings and evading trading limits. The verdict in the case that took the SEC more than a decade to bring leaves Samuel Wyly and his late brother’s estate potentially liable for up to $550 million, Bloomberg reports.