On March 26, 2023, the U.S. Securities and Exchange Commission announced a settlement with Andreas “Andy “ Bechtolsheim, the founder and former chairman of technology company Arista Networks, Inc., resolving charges that Bechtolsheim purchased the securities of Acacia Communications, Inc., a maker of highspeed optical interconnect products, based on material nonpublic information (“MNPI”) involving the company’s anticipated acquisition by Cisco Systems, Inc.
According to the SEC’s complaint, Bechtolsheim learned of Acacia’s impending acquisition in 2019 while serving as Arista Network’s chairman., having obtained the information while providing consulting services to an unnamed multinational technology company that was also interested in acquiring Acacia. According to the SEC, Bechtolsheim used the accounts of a close relative and an associate to purchase Acacia options shortly after receiving the MNPI. After Cisco’s planned acquisition of Acacia was announced publicly, Acacia’s stock price rose by more than 35 percent, allegedly generating approximately $415,000 in profits for Bechtolsheim’s close relative and associate.
The SEC filed a complaint in the US District Court for the Northern District of California accusing Bechtolsheim of violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with the trades. Under the terms of the settlement, which are subject to court approval, without admitting or denying the SEC’s allegations, Bechtolsheim agreed to pay a civil penalty of approximately $923,000, and consented to an officer and director bar for a period of five years.