SEATTLE - U.S. authorities filed criminal and civil charges Thursday against a former Microsoft manager, saying he fed inside information to a day trader who used it to clear $393,000 in illicit transactions.
Brian Jorgenson, 32, was a senior
manager in Microsoft Corp.'s Treasury
Group when he provided the information to his friend Sean Stokke, 28, according
to documents filed in U.S. District Court in Seattle. They are accused of
trading on three corporate developments: two recent quarterly earnings reports,
and Microsoft's 2012 investment in
Barnes & Noble Inc.
"Brian's approach to this is, he needs
to make it right," said Jorgenson's attorney, Angelo Calfo. "He made
a really bad decision, and he's prepared to take his medicine."
A message seeking comment was left for
Stokke's attorney, Jennifer Horwitz.
The pair planned to use the proceeds to
open their own biotech hedge fund, FBI agent Kathleen Moran wrote in the
criminal complaint, which charges Jorgenson and Stokke with 35 counts of
Both confessed when questioned, Moran
wrote, adding that Stokke said he had given Jorgenson about $50,000 in cash out
of the proceeds, in $10,000 increments, packed into envelopes.
The pair accumulated Barnes &
Noble stock options in advance of Microsoft's
announcement that it was investing in the company's digital book business, the
FBI said. The announcement caused Barnes & Noble's stock to jump by nearly
half, and the pair made $184,000.
They're also accused of trading on Microsoft's failure to meet earnings
expectations in the fourth quarter of fiscal 2013 and Microsoft's increased first-quarter profit in
"For every stock market winner,
there is a loser, and trading on confidential inside information is a cheater's
way of gaining at the expense of others," Seattle U.S. Attorney Jenny
Durkan said in a news release. "This conduct hurts companies, hurts
individuals, and shakes faith in our financial markets.
Jorgenson, a married father of four
from the north Seattle suburb of Lynnwood, joined Microsoft
in January 2011. He is hoping to be allowed to speak to Microsoft employees to share his cautionary
tale, Calfo said. Jorgenson expects to plead guilty in a deal with prosecutors,
the lawyer said.
Microsoft said in a written
statement that the company has no tolerance for insider trading. "We
helped the government with its investigation and terminated the employee,"
the statement said.
The Securities and Exchange Commission
filed related civil charges. The agency is seeking unspecified penalties and
restitution from Jorgenson and Stokke, and seeks to have Jorgenson barred against
serving as an officer or director of any public company.
"Abusing access to Microsoft's confidential information and
generating unlawful trading profits is not a wise or legal business model for
starting a hedge fund," Daniel Hawke, head of the SEC enforcement
division's market abuse unit, said in a statement.