Two former Qualcomm Inc. sales directors were charged with insider trading, allegedly making $230,000 in profit from trades in Atheros Communications Inc. when Qualcomm bought the company in 2011.
Derek Cohen and Robert Herman, both 52, were charged with four counts of securities fraud, the U.S. attorney's office in San Diego said.
Prosecutors said the men invested more than $500,000 in Atheros stock and options after they learned Qualcomm would be buying the company and before the $3.2-billion acquisition was announced.
Cohen was arrested two days ago at Los Angeles International Airport after he returned from a trip to the Philippines and pleaded not guilty at an arraignment hearing Monday, prosecutors said. Herman remained at large, they said.
Qualcomm fired the two men in September, prosecutors said.
The Securities and Exchange Commission filed a parallel civil lawsuit against both men as well as a third former Qualcomm salesman, Michael Fleischli.
Authorities alleged that the three men learned through emails and meetings that the San Diego maker of chips and cellphone technology was planning the acquisition of chip maker Atheros.
Authorities alleged that the men bought Atheros securities based on information that had not been made public and cashed in on the surging Atheros stock price.