Former CIO at Foundry Networks charged with insider trading

The executive allegedly shared information about the company's pending acquisition, the DOJ says

A former CIO and vice president at networking hardware vendor Foundry Networks has been charged with insider trading in conjunction with the company's acquisition in 2008 by Brocade Communications Systems, the U.S. Department of Justice said.

David Riley, who left Brocade in 2009, was arrested Tuesday in San Jose, California, the DOJ said in a press release. Also charged is hedge fund adviser Matthew Teeple, who Riley allegedly passed insider information to. Teeple, who allegedly passed the insider information to others, was also arrested Tuesday.

The information on Foundry's pending sale to Brocade allegedly earned an investment firm US$16 million in profits and enabled the adviser to avoid more than $11 million in losses, the DOJ said.

Riley was unavailable for comment Tuesday.

Riley allegedly provided Teeple with inside information on Brocade's pending acquisition of Foundry on July 16, 2008, five days before the deal was publicly announced, the DOJ said. Teeple then called another investment adviser, who began purchasing Foundry stock and call options while they were still on the phone, the agency alleged.

In addition to the charges against Riley and Teeple, the U.S. District Court for the Southern District of New York unsealed the guilty plea of John Johnson to conspiracy and securities fraud charges in connection with the alleged insider trading scheme. Johnson pleaded guilty to these charges on March 18.

Johnson is an acquaintance of Teeple and received the insider information from him, according to the DOJ.

Riley, 47, of San Jose, is charged with one count of conspiracy to commit securities fraud and three substantive securities fraud counts. The conspiracy count carries a maximum sentence of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. Each of the securities fraud counts carries a maximum sentence of 20 years in prison and a fine of $5 million or twice the gross gain or loss from the offense.

 

Teeple, 41, of San Clemente, California, is charged with one count of conspiracy to commit securities fraud and three substantive securities fraud counts. 

 

Johnson, 46, of Arvada, Colorado, is charged with one count of conspiracy to commit securities fraud and one substantive securities fraud count. 

The U.S. Securities and Exchange Commission has also announced civil charges against Riley, Teeple and Johnson.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags Matthew Teeplebusiness issuesJohn JohnsonBrocade Communications SystemslegalMergers and acquisitionsfoundry networksCriminalU.S. Securities and Exchange CommissionU.S. District Court for the Southern District of New YorkDavid Riley

Struggling for Christmas presents this year? Check out our Christmas Gift Guide for some top tech suggestions and more.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Shopping.com

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?