Andy Bechtolsheim, co-founder of Sun Microsystems and Arista Networks, recently settled insider trading charges with the SEC that will cost him nearly $1 million. The charges stem from Cisco’s acquisition of Acacia Communications in 2019. According to the SEC, Bechtolsheim confidentially learned of the impending acquisition on July 8, 2019, and traded options of Acacia, resulting in illegal profits of over $415,000 after the deal was publicly announced. Bechtolsheim, who is estimated to have a net worth of over $16 billion, has been barred from serving as a public company officer or director for five years as part of the settlement.
The complaint filed against Bechtolsheim alleged that he learned about the acquisition of Acacia from an employee at a separate multinational tech company. Following this discussion, Bechtolsheim traded Acacia options in the brokerage accounts of a close relative and an associate. The SEC stated that Bechtolsheim knew or should have known that the information he had was material and nonpublic and that he had a duty to keep it confidential. Despite the allegations, Bechtolsheim settled the charges without admitting or denying the allegations brought against him.
As part of the settlement, Bechtolsheim agreed to pay a fine of $923,740. Even though he resigned as Arista’s chairman and development chief in December, he continues to serve as the company’s chief architect. Being the company’s biggest shareholder with a stake worth close to $14 billion, Bechtolsheim’s actions have raised concerns about compliance with Arista’s code of conduct and insider trading policy. The company stated that it takes these matters seriously and will respond appropriately to the situation.
Andy Bechtolsheim, who resides in Incline Village, Nevada, co-founded Arista Networks in 2004 and took the company public ten years later. With a market cap of nearly $95 billion, Arista has become a major player in the networking industry. Prior to Arista, Bechtolsheim co-founded Sun Microsystems in 1982 and served as chief hardware designer. The company was later acquired by Oracle in a deal worth $7.4 billion in 2009.
The settlement of insider trading charges against Andy Bechtolsheim highlights the importance of maintaining confidentiality and trust in the business world. Despite his significant contributions to the technology industry, Bechtolsheim’s actions in this case have led to financial penalties and restrictions on his future involvement in public companies. It serves as a reminder that even individuals with substantial wealth and experience are not immune to the consequences of insider trading violations.
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