Litigation: SEC Brings Insider Trading Charges Against Family Member of Silicon Valley Executive

WASHINGTON, Aug. 18 -- The Securities and Exchange Commission issued the following litigation release (No. 3:22-cv-04711; N.D. Cal. filed August 17, 2022) involving Nicholas Daniel:

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The Securities and Exchange Commission today announced insider trading charges against Nicholas Daniel, a close relative of a senior employee at San Jose-based Cypress Semiconductor Corporation, for placing trades in advance of the announcement that Cypress would be acquired by another company. Daniel agreed to pay more than $738,000 to settle the charges.

The SEC's complaint alleges that Daniel of South Miami, Florida misappropriated material nonpublic information regarding the acquisition during a telephone call with his mother that occurred while his mother was at the home of Daniel's close relative, a senior employee at Cypress. Daniel, the SEC alleges, learned during this phone call that his family member was working on urgent issues related to Cypress's acquisition and that the acquisition would likely occur soon. After the phone call, Daniel immediately sought to purchase Cypress call options and, under false pretenses, borrowed $50,000 from his mother to fund the Cypress trades, just days before Cypress's acquisition announcement.

Before market open on June 3, 2019, Cypress announced that it would be acquired by Infineon Technologies AG. That same day, Cypress's stock price increased by 27.9%. Daniel sold all of his Cypress call options on June 3 and June 4, 2019 for a profit of $349,588-a nearly 700% return.

The SEC's complaint, filed in federal court in San Jose, charges Daniel with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Daniel, without admitting or denying the charges, has agreed to entry of a judgment, subject to court approval, imposing a permanent injunction and ordering him to pay $738,005, consisting of $349,588 in disgorgement, prejudgment interest of $38,829, and a civil penalty of $349,588.

The SEC's investigation was conducted by John P. Mogg of the Division of Enforcement's Market Abuse Unit in the San Francisco Regional Office with assistance from John S. Rymas of the Market Abuse Unit's Analysis and Detection Center. The matter was supervised by Assistant Director Steven D. Buchholz and Unit Chief Joseph G. Sansone. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

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Original text here: https://www.sec.gov/litigation/litreleases/2022/lr25473.htm