A former Qualcomm executive pleaded guilty in San Diego federal court Thursday to insider trading and admitted netting almost $200,000 in fraudulent proceeds by trading ahead of the global semiconductor firm’s 2011 purchase of Atheros Communications.
Derek Montague Cohen, 52, was a director in Qualcomm Inc.’s North America Sales Department when he learned of the imminent corporate acquisition, according to prosecutors.
In his plea, Cohen conceded that he used the privileged information to engage in a series of stock and options trades and thereby take advantage of his inside knowledge at the expense of ordinary shareholders.
Over the span of a few hours, he bought 10,400 shares of Atheros stock and 375 call options in the company at a cost of over $430,000. Less than an hour after Cohen’s last illicit trade, The New York Times reported on the planned acquisition by Qualcomm, which caused Atheros’ stock price to skyrocket.
Cohen sold his stock and stock options later that month for a profit of just under $200,000.
Cohen was the fourth former Qualcomm executive charged with insider trading in connection with the acquisition.
Jing Wang, the San Diego-based firm’s former executive vice president, pleaded guilty in July to insider trading and money laundering based on three instances in which he misused confidential information to trade in a secret brokerage account in the name of a British Virgin Islands entity.
Another defendant, Robert Herman — who made just under $30,000 in proceeds and pleaded guilty in the case late last year — was sentenced this month to three years’ probation, fined $50,000 and ordered to complete 1,500 hours of community service.
A fourth defendant, Michael Fleischli, was charged last May with making approximately $3,000 from insider trading on the Atheros acquisition, and is currently on a three-year period of supervision pursuant to a deferred prosecution agreement.
Additionally, former Merrill Lynch vice president Gary Yin has been convicted of conspiring with Wang to launder the proceeds of the latter’s insider trading and obstruct investigations into his misconduct.
Cohen’s sentencing is set for May 22.
— City News Service
