U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20115 / May 14, 2007
Securities and Exchange Commission v. Christopher M. Balkenhol, Case No. C-07-2537 JCS (N.D. Cal. filed May 14, 2007)
SEC Charges Former Oracle Vice President with Illegal Insider Trading in Stocks of Oracle Acquisiton Targets
Trader Misused Confidential Information Gleaned From Spouse, Who Was Lead Executive Assistant to Oracle's CEO and Co-Presidents
The Securities and Exchange Commission today filed insider trading charges against a former Oracle Corporation vice president who allegedly traded on confidential information about Oracle acquisition targets gleaned from his spouse, who was also employed by Oracle. The Commission alleges that Christopher Balkenhol, 40, of San Mateo California, learned about secret merger negotiations from his wife, who worked at Oracle as the lead executive assistant to Oracle's CEO and two co-Presidents. Without admitting or denying the Commission's allegations, Balkenhol agreed to settle the action against him, paying a total of approximately $198,000-including a penalty of nearly $100,000.
The Commission's complaint, which was filed in the United States District Court for the Northern District of California, alleges that Balkenhol traded in a series of Oracle acquisition targets during 2004 and 2005. Balkenhol allegedly learned about the planned acquisitions from his wife, who had access to the schedules of Oracle's three top executives and was aware of significant merger-related meetings. The Commission does not allege that Balkenhol's wife knew about Balkenhol's illicit trades. Rather, the complaint alleges that Balkenhol breached a duty not to misuse confidences gleaned from his wife for his own gain.
The complaint alleges that Balkenhol engaged in pattern of insider trading by purchasing stock in Oracle acquisition targets before any public announcement of Oracle's interest. Balkenhol's first profitable trade came on March 1, 2005, when he invested $85,000 in Minneapolis-based Retek Inc. the day after Oracle executives began considering a tender offer for Retek. When Oracle announced the tender offer the following week, Retek's stock price jumped and Balkenhol sold the shares for approximately $15,000 in alleged unlawful profits.
Balkenhol allegedly continued his pattern of insider trading with a series of stock purchases in another acquisition target, Siebel Systems, Inc., during Oracle's negotiations to acquire the company in 2005. On June 9, 2005, the day after Oracle's two co-Presidents secretly met with Siebel's CEO to initiate merger discussions, Balkenhol bought over $270,000 worth of Siebel's stock. Over the next three months, Balkenhol made three additional purchases of Siebel stock, each following a critical advance in the confidential negotiations. Again, Balkenhol's wife had access to detailed inside information relating to each such advance. From June to September, Balkenhol ultimately purchased over 50,000 shares of Siebel stock for a total of approximately $448,000. Immediately after Oracle's September 12, 2005 announcement of its acquisition of Siebel, Balkenhol sold his entire position for approximately $82,000 in unlawful profits.
The total of approximately $198,000 Balkenhol agreed to pay in settlement of the Commission's action includes $97,282 in disgorgement, $4,115 in prejudgment interest and a $97,282 civil penalty. Balkenhol has also agreed to a permanent injunction from further violations of Sections 10(b) and 14(e) of the Securities and Exchange Act of 1934, and Rules 10b-5 and 14e-3 thereunder.
The Commission acknowledges the assistance of the National Association of Securities Dealers (NASD) in this matter.