Insider Trading Alleged in Musicland Deal

The Securities and Exchange Commission on Thursday accused Musicland Stores Corp. investor Alfred Teo and some of his friends and relatives of trading on inside information before Best Buy Co. bought the music and video retailer in 2001.

The SEC also alleged that Teo, 57, made insider trades related to a proposed merger of computer chip maker Cirrus Logic Inc., of which he is a former director, and C-Cube Microsystems Inc. in 2001. The deal wasn’t completed. Teo was Cirrus’ No. 2 investor as of January, Bloomberg data showed.

In all, Teo and the people he tipped made $1.8 million on their insider trades, the SEC said in a civil complaint filed in a federal court in Newark, N.J.

Teo was Musicland’s biggest shareholder when he learned from company managers about the tender offer from Best Buy, the largest U.S. electronics retailer, the lawsuit says. Musicland shares rose 30% when the merger was announced. Best Buy sold Musicland last year.

Teo and his lawyer didn’t return calls seeking comment. Cirrus spokesman David Allen declined to comment.