The US Securities and Exchange Commission (SEC) said it would bar Andreas "Andy" Bechtolsheim, the co-founder of Sun Microsystems and an early investor in Google, from serving as a public company officer or director for five years for allegedly improperly trading.
Fortune reported that Bechtolsheim, 68, was accused of engaging in unlawful trading based on information he obtained from a longtime business colleague while bound by a non-disclosure agreement (NDA). According to the SEC, Bechtolsheim profited $415,000 from the transactions. His net worth is estimated to be over $18 billion.
The SEC said Bechtolsheim agreed to pay the fine of $923,740 and follow the five-year prohibition from serving as a public company officer or director to settle the insider trading charges made public Tuesday. The settlement is still subject to court approval.
Andreas' Andy' Bechtolsheim Accused of Betraying Longtime Business Partner for Profit
The SEC complaint noted that on July 8, 2019, Andy Bechtolsheim was informed by a senior executive at an unidentified third party that his company should bid on Acacia Communications, a provider of high-speed communications products, as Cisco Systems was about to acquire the company.
The SEC said Bechtolsheim, the senior executive, his firm, and the tech company were bound by an NDA. Bechtolsheim reportedly traded Acacia stocks in two brokerage accounts the same day - one belonging to a close relative and another to an associate - right before the market closed.
The following day, before the market opened, Acacia and Cisco announced the purchase, which caused Acacia's shares to surge 35%. The SEC noted that Bechtolsheim earned $415,726 from trading in the two accounts.
In March 2021, Cisco finally paid $4.5 billion to acquire Acacia. The SEC claimed that to make the lucrative trades, Bechtolsheim betrayed a longtime business associate.
"We allege that Bechtolsheim, while serving as the chairman of a publicly traded company, abused the trust of a longtime business contact who had shared highly sensitive information about an imminent corporate acquisition," said Joseph Sansone, head of the SEC's market abuse unit.
According to the agency, Bechtolsheim was aware or "reckless in not knowing" that the information he had received about Acacia and any possible acquisition was confidential and non-public.
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Who Is Andy Bechtolsheim?
Arista Networks' website says that Andy Bechtolsheim is the chief architect and creator of the firm. He oversees advanced artificial intelligence (AI), silicon, and optics projects.
As a doctorate student at Stanford University, he constructed a modular computer station and became a tech icon. He also invested early in Google and VMware.
Bechtolsheim's position at Arista changed to non-executive in November 2023, based on a statement the company sent to Fortune. The SEC's complaint said he resigned in December 2023 after serving as chairman and chief development officer.
According to a 2023 SEC filing, Bechtolsheim owns around 14% of Arista Networks.
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