Litigation Release No. 26014 / June 3, 2024

Securities and Exchange Commission v. Andreas Bechtolsheim, Civ. Action No. 5:24-cv-01845-PCP (N.D. Cal. filed Mar. 26, 2024)

SEC Obtains Final Judgment Against Former Arista Networks Chairman Andy Bechtolsheim for Insider Trading

On May 30, 2024, the U.S. District Court for the Northern District of California entered a final judgment, by consent, against Andreas "Andy" Bechtolsheim, the founder and Chief Architect of Silicon Valley-based technology company Arista Networks, Inc., in an action alleging that Bechtolsheim engaged in insider trading.

The SEC alleged in its complaint, filed on March 26, 2024, that Bechtolsheim, who was Arista Networks's chair at the time, illegally traded in Acacia options on July 8, 2019, after learning of Acacia's impending acquisition through his and Arista Networks's longstanding relationship with another multinational technology company that was also considering acquiring Acacia. Immediately after learning this information, Bechtolsheim allegedly traded Acacia options in the accounts of a close relative and an associate. The next day, July 9, 2019, before the market opened, Acacia and Cisco announced that Cisco had agreed to acquire Acacia. According to the SEC's complaint, Bechtolsheim's trading generated combined illegal profits of $415,726 in the accounts of his relative and associate.

Without admitting or denying the allegations in the SEC's complaint, Bechtolsheim consented to the entry of the judgment which enjoins him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, bars him from serving as an officer or director of a public company for five years, and orders him to pay a civil monetary penalty of $923,740.

The SEC's investigation was conducted by John P. Mogg of the Division of Enforcement's Market Abuse Unit in the San Francisco Regional Office with assistance from Patrick McCluskey, John S. Rymas, and Ainsley Kerr of the Market Abuse Unit's Analysis and Detection Center. The matter was supervised by Assistant Regional Director Rahul Kolhatkar and Market Abuse Unit Chief Joseph G. Sansone.