According to the SEC complaint, Forte obtained material, non-public information related to the merger from his brother who was Analog’s Chief Information Officer at the time. Just days before the merger was announced, Forte allegedly tipped his close friends Manning and Younis who reportedly knew that they were receiving inside information obtained from Forte’s brother and still purchased Linear securities based on the tip. Younis also recommended Linear stock to a business associate who, according to the SEC, also purchased the stock. After the companies jointly announced the merger on July 26, 2016, Linear stock increased by 29 percent causing the two friends to generate more than $90,000 in illegal gains, while Younis’s business associate realized over $11,000 for his trades. Forte also received a kickback payment from Manning who allegedly paid him several thousand dollars in cash for the tip.
The SEC charged Forte, Manning and Younis in the US District Court for the District of Massachusetts with violating Section 10(b) of the Securities and Exchange Act of 1934 and Rules 10b-5 thereunder, and sought a permanent injunction and civil monetary penalties from the court.
On the same day, parallel criminal charges were filed by the US Attorney’s Office for the District of Massachusetts against Forte, Manning and Younis in connection with the Linear securities trades, charging each with conspiracy to commit securities fraud.
SEC Press Release | Complaint | USAO of Massachusetts Press Release