Oracle insider trading case is settled
A former Oracle Corp. vice president agreed Monday to pay the Securities and Exchange Commission $198,000 to settle charges that he used inside information gleaned from his wife, the lead executive assistant to Oracle Chief Executive Larry Ellison, to buy stock in companies that Oracle planned to acquire.
As part of the deal, Christopher Balkenhol, 40, did not admit or deny the allegations but promised to pay back the alleged gains as well as a fine of nearly $100,000.
The case is the second in the last month in which the SEC accused a husband of improperly using information from his wife to buy stock. The husband of an Amgen Inc. executive settled similar charges in April.
In both cases, the wives who shared company secrets with their husbands did not face SEC charges. That’s because the SEC doesn’t bar workers from discussing their jobs with their spouses or other close family members. But buying or selling stock based on specific information they receive, or passing on a tip to another person with the expectation that that person will try to profit from it, is against the law, said Michael S. Dicke, assistant regional director in the SEC’s San Francisco office.
“What you can regulate is using information to trade in the markets,” he said.
The Balkenhols, of San Mateo, Calif., have been married since 1993. They both worked at Oracle, the Redwood Shores, Calif., database company, from 2000 to 2006. Carolyn Balkenhol was the supervising executive assistant for Ellison’s office, with access to secret company information and the schedules of the CEO and two co-presidents.
According to the SEC, she and her husband, who was then a vice president in Oracle’s application development group, talked every day about their jobs. Christopher Balkenhol had done some stock trading, the SEC said, but in the fall of 2004 he began to make larger trades in three companies, all of which were being secretly courted by Oracle at the time. They were Siebel Systems Inc., Retek Inc. and a third company, which the SEC did not name, that Oracle was reportedly interested in buying but did not.
The SEC complaint alleges that Christopher Balkenhol bought $270,000 of Siebel stock immediately after learning through his wife that Oracle might try to buy the software maker. In all, he snapped up nearly $450,000 in Siebel stock before the $5.85-billion deal was announced in September 2005.
The SEC’s Dicke said Carolyn Balkenhol did not know about her husband’s trading or give him information with the understanding that he might trade on it. “For liability in tipping cases, the person sharing the information must have an expectation that the other person will misuse it,” Dicke said.
Oracle spokeswoman Deborah Hellinger declined to comment. Neither the Balkenhols nor their lawyer, Sara Brody, returned calls seeking comment.
In the case of Amgen, the SEC alleged that Farryn Melton, a vice president at the Thousand Oaks biotechnology company, told her husband, Gary Melton, in November 2005 that the company was seeing positive results with a cancer antibody jointly developed with Abgenix Inc.
A month later, when she learned Amgen was considering buying Abgenix, she asked her husband whether he had bought stock in Abgenix. When he said he hadn’t, she told him not to. The SEC said he ignored her and made a profit of about $15,000. Without admitting or denying guilt, he agreed to pay $31,000 to settle insider trading charges.
