SEC Files Settled Insider Trading Case As Administrative Proceeding

One question in the wake of the Second Circuit’s decision in Newman regarding the personal benefit test for illegal tipping has been how the SEC would respond to a decision the U.S. Attorney told the Court would significantly undermine insider trading enforcement. To date it has been mixed – the agency has brought cases in district court and as administrative proceedings as discussed here.

Yesterday the agency filed a settled insider trading case as an administrative proceeding. The allegations regarding the tipper and trader appeared to be standard, pre-Newman allegations. There was no quid pro quo claim. In the Matter of Helmut Anscheringer, Adm. Proc. File No. 3-16589 (June 15, 2015).

This action centers on the acquisition of Authen Tech, Inc. by Apple, Inc., announced on July 27, 2012. Respondent Anscheringer is a resident of Basel, Switzerland who owns residential property in Naples, Florida. He has been a friend and business colleague of Individual A for 30 years.

The deal traces to late 2011 when Apple expressed an interest in the fingerprint sensor technology owned by Authen Tech. Initially Apple sought a commercial arrangement regarding the technology. On May 1, 2012 Apple changed its approach, formerly proposing to acquire the company. Subsequently, the two firms worked on the terms of the acquisition and the licensing agreements. The final deal called for Apple to acquire the Authen Tech for $355 million in cash, the equivalent of $8 per share. At the time shares of Authen were trading at about $3.30 per share.

Individual A is an immediate family member of an Authen Tech executive who was active in the negotiations. This included communications with Apple. The executive learned about Apple’s May 1 proposal, according to the Order. He later communicated information about the offer to his family.

Mr. Anscheringer has known, and been friends with, Individual A for about thirty years. The two met in Basel while working for the same firm. Both own homes in Naples to which they travel, particularly during the winter months. Mr. Anscheringer knew that his friend was a member of a family one of whom was an executive at Authen.

On May 18, 2012 Mr. Anscheringer communicated with Individual A, according to the Order. That same day he purchased Authen securities for the first time. On two days in late July he again purchased Authen securities, acquiring 4,000 call option contracts. He also purchased an additional 2,000 shares through a company account of which he was the beneficiary.

Following the announcement the share price of Authen increased about 60%. Mr. Anscheringer realized profits of $1,820,024. The Order alleges violations of Exchange Act Section 10(b).

To resolve the matter Mr. Anscheringer consented to the entry of cease and desist order based on Exchange Act Section 10(b). He also agreed to disgorge his trading profits and to pay prejudgment interest and a civil penalty of $910,012.