Risk & Compliance

Pillow Talk Gone Wild?

In the latest of a rash of insider-trading cases, the SEC has filed charges against a former Oracle vice president regarding misuse of information ...
Dave Cook and Stephen TaubMay 14, 2007

The Securities and Exchange Commission has announced yet another case of insider trading that might well have begun as pillow talk.

On Monday, the SEC filed charges against former Oracle vice president Christopher Balkenhol. According to the commission, Balkenhol learned about secret merger negotiations from his wife, who worked at Oracle as the lead executive assistant to the chief executive officer and two co-presidents.

The SEC stressed that it has not alleged that Balkenhol’s wife knew about his illicit trades, only that Balkenhol breached a duty not to misuse confidences obtained from her for his own gain.

Specifically, according to the complaint, during 2004 and 2005 Balkenhol traded in the stock of two companies that Oracle planned to acquire — Retek and Siebel Systems — after learning of the deals from his wife, who had access to the schedules of Oracle’s three top executives and was aware of significant merger-related meetings.

Without admitting or denying the allegations, Balkenhol agreed to pay $97,282 in disgorgement, $4,115 in prejudgment interest, and a $97,282 civil penalty, and to refrain from future violations of the relevant securities laws.

“Spouses and close family members of highly placed corporate employees will sometimes learn important information about the company that they know is confidential,” stated Helane Morrison, regional director of the commission’s San Francisco office. “In these situations, the family members have a duty to refrain from using the information for personal gain in the stock market.”

Just last week, the SEC charged former Morgan Stanley employee Jennifer Xujia Wang and her husband, Ruopian Chen, a former employee of ING Investment Management Services, with insider trading for allegedly buying stocks on the basis of material, nonpublic information culled from confidential merger talks. They intend to plead not guilty to any criminal charges that may be brought, their attorney said at the time.

The charges were handed up on the same day that another former Morgan Stanley executive, Randi Collotta, and her husband, Christopher Collotta, pleaded guilty in one of the biggest insider-trading schemes since the 1980s.

Also last week, the SEC filed charges against a Hong Kong couple, Kan King Wong and Charlotte Ka On Wong Leung, who allegedly engaged in illegal insider trading before the public announcement of Rupert Murdoch’s $5 billion bid for Dow Jones.