U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25955 / March 26, 2024
Securities and Exchange Commission v. Andreas Bechtolsheim, Civ. Action No. 5:24-cv-01845 (N.D. Cal. filed Mar. 26, 2024)
SEC Charges Former Arista Networks Chairman Andy Bechtolsheim with Insider Trading
The Securities and Exchange Commission filed insider trading charges against Andreas “Andy” Bechtolsheim, the founder and Chief Architect of Silicon Valley-based technology company Arista Networks, Inc. To settle the SEC’s charges, Bechtolsheim agreed to pay a civil penalty of nearly $1 million.
According to the SEC’s complaint, Bechtolsheim misappropriated material nonpublic information regarding the impending acquisition of Acacia Communications, Inc., a manufacturer of highspeed optical interconnect products. The SEC alleges that Bechtolsheim, who was Arista Networks’s chair at the time, learned of Acacia’s impending acquisition on July 8, 2019, through his and Arista Networks’s longstanding relationship with another multinational technology company that was also considering acquiring Acacia and consulted with Bechtolsheim concerning the potential acquisition. Immediately after learning this information, Bechtolsheim allegedly traded Acacia options in the accounts of a close relative and an associate. The next day, July 9, 2019, before the market opened, Acacia and Cisco announced that Cisco had agreed to acquire Acacia for $70 per share. That day, Acacia’s stock price increased by 35.1 percent. According to the SEC’s complaint, Bechtolsheim’s trading generated combined illegal profits of $415,726 in the accounts of his relative and associate.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, charges Bechtolsheim with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Bechtolsheim, without admitting or denying the charges, has agreed to entry of a judgment, subject to court approval, imposing a permanent injunction, a bar from serving as an officer or director of a public company for five years, and a civil monetary penalty of $923,740.
The SEC’s investigation was conducted by John P. Mogg of the Division of Enforcement’s Market Abuse Unit in the San Francisco Regional Office with assistance from Patrick McCluskey, John S. Rymas, and Ainsley Kerr of the Market Abuse Unit’s Analysis and Detection Center. The matter was supervised by Assistant Director Rahul Kolhatkar and Unit Chief Joseph G. Sansone. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.