A former Microsoft senior manager has been charged with insider trading by the U.S. Securities and Exchange Commission, passing confidential financial results information to a partner who then traded on the stock exchange and shared the ill-gotten gains. Brian Jorgenson, who worked in Microsoft’s corporate finance and investments division, and friend Sean T. Stokke made $393,125 in total through the scheme, the SEC says; meanwhile, a parallel criminal action by the U.S. Attorney’s Office for the Western District of Washington has also been announced.
Jorgenson and Stokke apparently intended to build enough money through the illegal process to start their own hedge fund. The pair began operations in April 2012, when the Microsoft manager revealed to his friend that the company planned to invest in Barnes & Noble’s ereader business.
Stokke bought up around $14,000 worth of B&N common stock, which then surged after the deal was made public. As a result, they made almost $185,000 the SEC says.
A further $195,000 was made when Jorgenson passed Stokke information on Microsoft’s Q4 earnings announcement in July 2013. $13,000 more arrived after they traded call options in advance of Microsoft’s Q1 2014 financial results, which Jorgenson knew to be more than 14-percent higher than the market consensus was expecting.
According to the Seattle Times, Jorgenson claims to have been unaware of the extent of the cash Stokke’s investments returned, estimating it to be more in the region of $200,000. Of that, the former exec says he received only around $40,000.
Jorgenson was fired from his $130,000 per year position at Microsoft last month, after the scheme was realized. The company says it assisted the government’s investigation; potential penalties include up to twenty years of prison time.