Risk & Compliance

Tech Exec Fined for Insider Trading on Chip Deal

A senior engineering executive traded on material, nonpublic information about a pending merger between two semiconductor firms.
Matthew HellerMay 3, 2016

A Silicon Valley executive has been fined more than $500,000 for trading on inside information about a possible merger of semiconductor equipment firms. He obtained the information while acting as a conduit between his employer and the target company.

The U.S. Securities and Exchange Commission said Peter Nunan, 58, made $254,858 in illicit profits after a board member at FSI International provided him with confidential information about its pending merger with Tokyo Electron in an effort to solicit a competing bid from Nunan’s employer.

Nunan at the time was a senior engineering executive at the U.S. subsidiary of Screen Holdings, another Japanese semiconductor equipment maker. To settle the SEC’s charges, he agreed to pay disgorgement of his profits plus interest of $24,587 and a penalty of $254,858 for a total of $534,303.

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“Nunan knew from the material, nonpublic information that the FSI director had provided him that Tokyo Electron was bidding to acquire FSI at a substantial premium over the market price of FSI stock,” the SEC said in a civil complaint. “Nunan received the material, nonpublic information about the potential acquisition in the course of his employment, and had a duty not to trade on or otherwise misuse the confidential information for his personal benefit.”

According to the SEC, the FSI board member had a professional relationship with Numan and no later than February 2012 told him that Tokyo Electron was in talks to buy FSI.

“The director told Nunan this confidential information because FSI’s board of directors was interested in soliciting a competing bid for FSI,” the SEC said.

Over the next six months, Nunan allegedly acquired 105,000 FSI shares at an average price of $3.76 a share while acting as a conduit between the FSI director and a Screen Holdings executive. He also recommended the trade to his brother, who purchased 1,000 shares of FSI stock, the SEC said.

After Tokyo Electron and FSI announced the merger, priced at $6.20 a share, on Aug. 13, 2012, the stock jumped more than 52%. Nunan sold most of his shares the next day.