Monday, July 20, 2009
The SEC today filed an insider trading action in the United States District Court for the Southern District of California against Andres Leyva, a former Director of Strategic Marketing Analysis at San Diego-based Qualcomm Incorporated. The SEC's complaint alleges that Leyva realized more than $34,000 in illegal profits by trading on the basis of confidential information about Qualcomm's new licensing agreement with Nokia Corporation and the settlement of all litigation between the companies.
According to the SEC's complaint, Qualcomm and Nokia were set to begin trial on July 23, 2008 in a key Delaware case to determine whether Nokia owed Qualcomm substantial royalty revenues when the companies' licensing agreement expired in April 2007. The complaint alleges that on July 22, 2008, at approximately 7:30 a.m. (PT), the senior Qualcomm executive leading negotiations with Nokia representatives in Delaware informed Leyva that Nokia had surprised Qualcomm with a significant settlement offer and conveyed the key terms of that offer to Leyva, including Nokia's proposal to increase an upfront payment to Qualcomm from $500 million to $2.5 billion. Approximately two hours later, the complaint alleges, Leyva purchased 80 Qualcomm call option contracts priced at $.39 each with a strike price of $50.
After the market closed on July 23, 2008, Qualcomm and Nokia announced their new licensing agreement and a global settlement of all litigation between them. On July 24, 2008, Qualcomm's stock price increased 17 percent to $52.43, and its trading volume increased 394 percent. That same day, the complaint alleges, Leyva sold the 80 Qualcomm call option contracts for a profit of $34,739.98.
The SEC's complaint charges Leyva with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks a permanent injunction, disgorgement of Leyva's illegal trading profits, and civil penalties.