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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Mergers and acquisitionsbusiness issueslegalfoundry networksCriminalU.S. Securities and Exchange CommissionU.S. District Court for the Southern District of New YorkBrocade Communications SystemsMatthew TeepleJohn JohnsonDavid Riley

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

Grant Gross

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

Logitech Ultimate Ears Wonderboom Bluetooth Speaker

Learn more >

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?