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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23586 / June 29, 2016

Securities and Exchange Commission v. Andrew F. Kerr, Civil Action No. :16-cv-03650 (N.D. Cal.)

SEC Charges Individual with Insider Trading in Stock of Company Acquired by Apple

The Securities and Exchange Commission today charged a family member of a corporate insider for insider trading in advance of Apple Inc.'s acquisition of AuthenTec, Inc.

In a complaint filed in the U.S. District Court for the Northern District of California, the SEC alleges that Andrew F. Kerr found out about the negotiations surrounding Apple's acquisition of AuthenTec from his mother. She purportedly learned of the information from another son, who was an executive at AuthenTec. The complaint further contends Kerr bought 12,740 shares of AuthenTec on margin in his trading account in May and June 2012 using the material nonpublic information he misappropriated from his mother. As a result of his purchases, Kerr allegedly incurred a deficit of almost $52,000 in his trading account. According to the complaint, not only did Kerr trade in his own account, but he also opened a brokerage account in the name of his mother-in-law, who had no prior investment experience. Spending all of the funds in her account, the SEC alleges that Kerr exclusively bought AuthenTec on her behalf.

The SEC also alleges that in addition to his margin loan, Kerr had drained his savings and checking accounts, borrowed funds from his credit card and redeemed government savings bonds to fund his purchases of AuthenTec. Due to his illicit trades, Kerr's profits in the two accounts allegedly totaled more than $68,000.

The SEC's complaint charges Kerr with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks a permanent injunction, disgorgement plus prejudgment interest and civil penalties against the defendant.

The SEC's continuing investigation is being conducted by Sunny H. Kim. The case is being supervised by Jason R. Berkowitz and the litigation is being led by Robert K. Levenson in the Miami Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the Options Regulatory Surveillance Authority.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2016/lr23586.htm


Modified: 06/29/2016