December 2, 2004
Insider Trading Charge for Former Network Associates Officer
On Nov. 30, Evan Collins, the former controller of Network Associates (now McAfee, Inc.) was charged with one count of securities fraud in a criminal information for insider trading based on stock sales he made in November 2000 in advance of the release of negative information by the company (you remember that darn tech bubble bursting). Collins also settled an SEC civil complaint filed the same day, and agreed to an injunction barring future violations of the securities laws and to disgorge unlawful trading profits (losses avoided) of $253,125, with prejudgment interest of $63,336 and pay a civil penalty of $253,125 (SEC Litigation Release No. 18986).
In addition to Collins, two other former Network Associates executives have been charged with insider trading: Prabhat Goyal, the former CFO, was indicted on June 10, 2004, on 20 counts of securities fraud and conspiracy (indictment here); and, Terry Davis, Collins' replacement as Controller, pled guilty to securities fraud on June 11, 2003 and is cooperating in the government investigation. Based on the filing of a criminal information and settlement of the SEC action, it appears that Collins will also cooperate and likely be called to testify against Goyal. There is a hearing in Goyal's case on Dec. 16.