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Former Microsoft Executive Charged with Insider Trading

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The Securities and Exchange Commission announced on Thursday that it has charged former Microsoft senior portfolio manager Brian Jorgenson and his friend/business partner Sean Stokke with insider trading ahead of company announcements.

They are also criminally charged by the U.S. Department of Justice.

According to the SEC, Jorgenson obtained confidential information about upcoming company news through his work in Microsoft's corporate finance and investments division. He then relayed the news to his friend and co-worker Stokke in advance of the announcements, the most recent in October. Stokke then traded his shares, and split the "illicit" profits with Jorgenson in their shared brokerage accounts. With the extra money at hand, the two made joint trading decisions with the goal of making enough money to create a hedge fund.

The trading actually first started before Microsoft announced its deal with Barnes & Noble's e-reader business in April 2012. Jorgenson told Stokke what was about to happen, so Stokke purchased around $14,000 worth of call options on Barnes & Noble common stock. Once the $300 million deal between Microsoft and the book retailer was announced, the stock price jumped up to $20.75 per share, a 51.68 percent increase. Stokke sold those shares immediately and made a profit of $185,000.

In July 2013, another scheme brought in $195,000, and one in October 2013 that only brought in a mere $13,000. Ultimately, the two made a combined $393,000 in profits. Now each have 35 felony counts of insider trading.

"Jorgenson and Stokke are charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, both directly and pursuant to 20(d) of the Exchange Act," the SEC reports. "The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and financial penalties against Jorgenson and Stokke as well as an officer-and-director bar against Jorgenson."

Microsoft reportedly fired Jorgenson when the company heard about the insider trading. The company also helped the government with its investigation. A spokesperson told The Seattle Times that Microsoft has "zero tolerance" when it comes to insider trading.

"I am sorry," Jorgenson said. "It was just greed. I was focusing too much on the material things. This is an aberration of who I am."

Add your comment Display 17 Comments.
  • 5 Hide
    wemakeourfuture , December 20, 2013 9:58 AM
    Good. There's rampant insider trading. Unfortunately there isn't enough resources to go after the bulk of them so they focus on major cases like this one. Too bad they don't stop the nonsensical "War on Drugs" and instead of wasting time and resources arresting, prosecuting and incarcerating possession and minor trafficking charges and use it to cull the massive illegal trading on Wall Street.
  • 0 Hide
    tomate2 , December 20, 2013 10:04 AM
    Maybe it is time to find another photo to use?
    The new design for the site is quite pleasant, but the old photos not as much.
  • 8 Hide
    drwho1 , December 20, 2013 10:19 AM
    I saw the picture and my first thought was.... "Former Microsoft employee now working at McDonald's"
  • 1 Hide
    Onus , December 20, 2013 10:31 AM
    Willful wrongdoing such as this will continue until there are dire consequences for it. Head in a bucket to catch the mess, and pull the trigger. GAME OVER.
  • 3 Hide
    bmwman91 , December 20, 2013 11:00 AM
    Good, financial cheaters should be prosecuted. The thing that burns me up is that the cost to try them will most likely be far more than the $393k that they pilfered.

    Then you have the prolific psychopaths on Wall Street that nearly imploded our entire economy and got out of it by essentially holding a gun to the head of pensioners everywhere. There has not been ONE SINGLE prosecution of a hedge fund manager or Goldman executive. NOT ONE. All of these criminal psychopaths are still free and running the same scams at the expense of the 99.9% because they own the government. They gave themselves $billions in bonuses after running the most reckless ponzi scheme in history and then "saving the firm" by forcing the bailouts at the expense of us, our children and probably a generation or two beyond that.

    "Regulatory capture" does not even begin to describe the sad state of our government and the banking nexus that operates it as it sees fit. A lot of people don't really understand the level of corruption and greed that led up to the 2008 crash, and that are still operating now (with even LESS regulation). Check out Griftopia by Matt Taibbi. It's like something I would expect from Hunter S. Thompson if he covered the financial crisis, so it is pretty entertaining while also horribly depressing.
  • 0 Hide
    robochump , December 20, 2013 11:07 AM
    @ Wemakeourfuture - Good insider traders are much better at hiding their trails than this Jorgenson n' buddy coalition. Funny how the basic criminal code is broken by most people (blue or white collar), Never repeat the same crime over and over to create a pattern. Heh...
  • 0 Hide
    Cazalan , December 20, 2013 11:39 AM
    But crack is bad. Stealing fake money is still just fake money. I mean fiat currency.

    Yes I'm kidding. I'm with the poster above. Dissolve the DEA and pour all that into SEC.
  • 0 Hide
    Onus , December 20, 2013 11:45 AM
    There's no need to pour more taxpayer money into the SEC. Fine the perps into penury to fund SEC operations.

    ...and then use the execution bucket on them.
  • 0 Hide
    catfishtx , December 20, 2013 11:56 AM
    Glad these guys got caught. Although I don't know if execution is a proper punishment or not.
  • 0 Hide
    Geef , December 20, 2013 1:36 PM
    I do agree with the guys about the picture. You gotta find a new hamburgler pic or something else totally. This pic in no way even matches up to how funny that fat guy pic looks like in the "google makes it hard to find boobs" story.
  • 0 Hide
    cburke82 , December 20, 2013 4:21 PM
    $400k is going to start a hedge fund?
  • 0 Hide
    pjmelect , December 20, 2013 4:21 PM
    You don't need to be a insider trader to know that after Windows 8 Microsoft shares are going down!
  • 0 Hide
    wemakeourfuture , December 20, 2013 4:54 PM
    Quote:
    pjmelect
    You don't need to be a insider trader to know that after Windows 8 Microsoft shares are going down!


    MSFT current share price are higher than before Windows 8 and during the debacle . They're at 5 year highs. I did happen to sell mine before the windows 8 drop, in anticipation of a fall, made a nice profit off MSFT. Price is too high to get back in, better stocks to buy.

    They're shares already have baked in a fall of Windows 8, that's old news for investors.
  • -1 Hide
    seinfeld , December 20, 2013 8:06 PM
    so someone who worked for microsoft. decided to invest in the company he works for, because he had the ability to see what microsoft were doing in the future? That gets you in trouble? Far out them im guilty as I do research like that and then make informed decisions. was he supposed to bet against the company he works for?
  • -2 Hide
    Grandmastersexsay , December 20, 2013 9:34 PM
    I find all the "good" comments amusing. What is so bad about insider trading? What negative impacts does it have?

    It might, maybe, possibly, slightly destabilize the markets? So what if it did. Less stability means higher risk with the same return, which means less investment in public companies. The stock market does more harm than good. Public companies don't care about anything long term. The big public corporations like Microsoft don't create they buy and resell. A middleman that takes but adds little.

    Maybe people don't like the whole "unfairness" of the process. Insider trading, which can only be done by priveledged insiders. Bah. Be suspicious of class warfare tactics. They're designed to provoke an emotional response, not a logical one.

    Then there are those that feel it is good that someone breaking the law gets caught, no matter what the law is. If it is illegal they shouldn't be doing it... Well those people don't understand why we have laws.
  • 0 Hide
    spentshells , December 21, 2013 4:49 AM
    Let me get this straight, millionaire's are committing crimes the become more wealthy and they won't go to jail for stealing? I've heard this somewhere before.
  • 1 Hide
    wemakeourfuture , December 21, 2013 5:39 AM
    Quote:
    seinfeld
    so someone who worked for microsoft. decided to invest in the company he works for, because he had the ability to see what microsoft were doing in the future? That gets you in trouble? Far out them im guilty as I do research like that and then make informed decisions. was he supposed to bet against the company he works for?


    I think you first need to understand what insider trading is. Then see what allegations have been made then connect the dots and see if the charges were suitable. From your response you seem to not understand why the charges were laid.

    Inside trading is toxic to an open and fully working market system.
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