Feeds

Ex-Yahoo! bigwig! admits! insider! trading!

He spilled beans on Microsoft search deal

Next gen security for virtualised datacentres

The US stock market regulator has charged an ex-Yahoo! exec and a pal with insider trading after the pair discussed a search engine partnership between Yahoo! and Microsoft.

The Securities and Exchange Commission (SEC) said Robert Kwok, who was Yahoo!'s senior director of business management, breached his duty to the company when he told Reema Shah, a mutual fund manager at a subsidiary of Ameriprise Financial, that the deal was on.

Shah had asked Kwok about the deal as rumours did the rounds in July 2009 that Microsoft and Yahoo! would team up; Kwok told her that the info was being kept under wraps at Yahoo! and only a few people knew.

Shah then told the mutual funds she managed to buy over 700,000 shares in Yahoo!, which were later sold for profits of around $389,000.

Kwok let on about the deal because, a year earlier, Shah had done the same for him: she tipped him off about an impending acquisition announcement between two companies that she knew about and he traded on his personal account on the tip. He only made off with a measly $4,754 however.

"Kwok and Shah played a game of you scratch my back and I'll scratch yours," Scott Friestad, associate director in the SEC's Division of Enforcement, said in a canned statement.

"When corporate executives and mutual fund professionals misuse their access to confidential information, they undermine the integrity of our markets and violate the trust placed in them by investors."

Both Kwok and Shah, who live in California, have agreed to settle the SEC's charges of insider trading. A court will later decide how much of their ill-gotten gains they'll have to pay back and what other fines they'll face.

Under the settlements, Shah will be permanently banned from the securities industry, and Kwok will be permanently blocked from serving as an officer or director of a public company.

However, the pair are also in the dock for charges of conspiracy to commit securities fraud, which they pleaded guilty to and are awaiting sentencing.

Aside from the two specific cases in the insider trading charges, they had been exchanging tip-offs since they met in January 2008.

Kwok regularly gave Shah information on Yahoo!, such as whether its quarterly performance would meet analyst expectations and Shah would give him information she learned through her job so he could make personal investments. ®

The essential guide to IT transformation

More from The Register

next story
Goog says patch⁵⁰ your Chrome
64-bit browser loads cat vids FIFTEEN PERCENT faster!
Chinese hackers spied on investigators of Flight MH370 - report
Classified data on flight's disappearance pinched
NIST to sysadmins: clean up your SSH mess
Too many keys, too badly managed
Scratched PC-dispatch patch patched, hatched in batch rematch
Windows security update fixed after triggering blue screens (and screams) of death
Researchers camouflage haxxor traps with fake application traffic
Honeypots sweetened to resemble actual workloads, complete with 'secure' logins
Attack flogged through shiny-clicky social media buttons
66,000 users popped by malicious Flash fudging add-on
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.