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Four charged by SEC over Silicon Valley insider trading settle case

February 6, 2015, 12:00 AM UTC
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The Securities and Exchange Commission (SEC) headquarters building stands in Washington, D.C., U.S. on Tuesday, Oct. 1, 2013. The U.S. government began its first partial shutdown in 17 years, idling as many as 800,000 federal employees, closing national parks and halting some services after Congress failed to break a partisan deadlock by a midnight deadline. Photographer: Joshua Roberts/Bloomberg via Getty Images
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(Reuters) – Four California men accused by the U.S. Securities Exchange Commission of involvement in a Silicon Valley insider trading ring have agreed to pay roughly $1.67 million to settle the regulator’s civil fraud charges.

The SEC said former Barclays Capital (BCS) analyst John Gray and his friend Christian Keller used disposable prepaid mobile phones to conduct insider trading from 2009 to 2012.

It said that in exchange for kickbacks, Keller provided tips about confidential news he learned while working as a financial analyst at the chipmaker Applied Materials (AMAT) and in investor relations and finance at Rovi, which provides technology for digital entertainment devices.

Gray and Keller then tried to hide illegal trades in an account held in the name of Gray’s friend, Kyle Martin, who worked at a Beverly Hills car dealership. Gray also gave tips to his friend Aaron Shepard, an installer of car stereos, the SEC said.

The scheme resulted in about $743,000 of illegal profits from trades ahead of Applied Materials’ purchases of Semitool Inc in 2009 and Varian Semiconductor Equipment Associates Inc in 2011, and two Rovi earnings announcements in 2012, the SEC said.

None of the defendants admitted wrongdoing in agreeing to settle.

Gray, 38, of Redondo Beach, agreed to pay about $758,200 and accept a securities industry ban. Keller, 40, of Los Altos, settled for $473,471, and accepted a 10-year ban from serving as an officer or director of public companies.

Martin, 35, of Santa Clarita, settled for $264,680; and Shepard, 37, of San Francisco, agreed to pay $171,021.

Lawyers for Gray and Keller did not immediately respond to requests for comment. Lawyers for Martin and Shepard declined to comment. None of the companies was charged, and a Rovi spokesman said Keller left in May 2013.