U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21221 / September 24, 2009
Securities and Exchange Commission v. Reza Saleh and Amir Saleh, Case No. 3:09-cv-01778-M (BMGL) (N.D. Tx. filed September 23, 2009)
SEC CHARGES PEROT COMPANY EMPLOYEE IN $8.6 MILLION INSIDER TRADING SCHEME
The Securities and Exchange Commission yesterday charged Richardson, Texas resident Reza Saleh with insider trading around the public announcement of Dell Inc.'s tender offer for Perot Systems earlier this week.
In the SEC's complaint, filed in the U.S. District Court for the Northern District of Texas, the SEC alleges that Saleh made increasingly large purchases of Perot Systems call options contracts based on material, non-public information that he learned in the course of his employment with, or duties for, two Perot-related private companies and Perot Systems. Immediately following the tender offer announcement on Monday, September 21, Saleh sold all of the call option contracts in the accounts and reaped approximately $8.6 million in illicit profits.
Later that same morning, SEC staff with assistance from the Options Regulatory Surveillance Authority identified Saleh as a suspicious trader. Soon after being contacted by SEC staff, Saleh acknowledged to a Perot Systems director that he knew about the impending transaction when he traded.
According to the SEC's complaint, Saleh purchased 9,332 Perot Systems call option contracts through two brokerage accounts between Sept. 4 and Sept. 18, 2009. The call option contracts were set to expire in October 2009 and January 2010. Saleh sold all of the call options following the announcement as Perot Systems' stock price immediately increased by approximately 65 percent.
The SEC's complaint alleges that Saleh violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The SEC has sought an emergency asset freeze, a preliminary injunction and a final judgment permanently enjoining Saleh from future violations of these provisions of the federal securities laws and ordering him to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.
The SEC's complaint also names Amir Saleh of Richardson, Texas, as a relief defendant, in order to recover trading profits he received as a co-account holder on one of Reza Saleh's brokerage accounts.