Fed’s insider-trading crackdown brings charges in California

NEW YORK — The federal government has filed charges against a California hedge-fund analyst and a former tech executive in its continuing crackdown on insider trading on Wall Street.

Federal prosecutors accused Matthew Teeple, 41, of San Clemente, with passing along illicit information he allegedly received from David Riley, a former chief information officer at Foundry Networks Inc. Riley, 47, lives in San Jose.

Teeple, an analyst for a firm that provided information to a San Francisco-based hedge fund, allegedly passed along the illicit information in 2008. The alleged trading scheme in part involved Foundry’s acquisition by Brocade Communications Systems Inc., another tech company.

Prosecutors said the arrangement netted $27 million in illegal profits and avoided losses. Teeple and Riley each face three counts of securities fraud and another of conspiracy.

The government also announced a guilty plea by a third defendant in the case: John Johnson, 46, of Arvada, Colo.

U.S. Atty. Preet Bharara, the top federal prosecutor in Manhattan, said the defendants “embarked on a high-stakes game that has repeatedly proven to be unwinnable.”

“With the charges against them and the plea of John Johnson that we announced today, the ranks of privileged professionals who behave as if they are above the law continue to swell,” he added.

Teeple’s attorney, Nathan Hochman, of the firm Bingham McCutchen in Santa Monica, said: “Mr. Teeple intends to vigorously defend himself against the government’s allegations.”

Attorneys for the other defendants count not immediately be reached.

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