Risk & Compliance

Two Accused of Insider Trading on Mobileye Deal

The case is the second alleging traders made illegal profits based on nonpublic information about Intel's $15.3 billion takeover of Mobileye.
Matthew HellerApril 7, 2017
Two Accused of Insider Trading on Mobileye Deal

In the second insider trading case arising from the $15.3 billion takeover of Mobileye NV by Intel, two Virginia men have been charged with making $925,000 in illicit profits based on nonpublic information about the pending deal.

The U.S. Securities and Exchanges Commission accused Lawrence Cluff and Roger Shaoul of “highly suspicious” transactions, alleging they acquired Mobileye shares and call options after the adult children of two Mobileye founders told Shaoul’s adult children, with whom they were friends, about Intel’s interest in the maker of sensors and cameras for driverless vehicles.

After the takeover was announced on March 13, Mobileye shares rose 28.2% in one day.

The charges filed Wednesday against Cluff and Shaoul came nearly two weeks after the SEC brought a similar case against two Israeli residents, Ariel Darvasi and Amir Waldman, who allegedly generated more than $4.9 million in gains by trading illegally in Mobileye stock.

According to the SEC, the defendants in both cases were connected to Mobileye through the academic community at the Hebrew University of Jerusalem, which developed Mobileye technology and where Shaoul, an Israeli citizen, had studied.

The SEC said Cluff and Shaoul traded in two accounts held in Cluff’s name, including one that had been dormant for six years and one opened on Jan. 29, 2017, around the time Mobileye and Intel began formal merger talks.

On Feb. 1, Cluff allegedly used the new account to acquire 3,782 Mobileye shares at a cost of nearly $161,500. By March 10 — the last trading day before the announcement of the takeover — the account held 3,414 Mobileye shares and 1,209 call options with strike prices between $50 and $55, the SEC said.

Mobileye shares closed at $47.27 on March 10. After the announcement of Intel’s $63.54-per-share-offer, Cluff allegedly sold 862 Mobileye call options for proceeds of $617,563 and, according to the SEC, his accounts have unrealized gains of approximately $335,000.

The SEC has obtained a court order freezing assets of Cluff and Shaoul.