Israeli Defendant Denies Mobileye Insider Trading Charges
Amir Waldman, former vice president of Israel-based medical device company Syneron Medical, is being accused by the SEC of making over $4 million from insider trading in Mobileye securities
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According to the complaint, Mr. Waldman, a former vice president of Israel-based medical device company Syneron Medical, conducted "highly suspicious" trading in Mobileye securities that resulted in profits of at least $4.5 million, producing a return of 1883% in just six weeks.
Intel announced its $15.3 billion acquisition of Jerusalem-based automotive technologies company Mobileye on March 13, sending Mobileye’s share price up by 28% by the close of trading that day. The negotiations for the deal started in late January, and a non-disclosure agreement between Intel and Mobileye's founders Amnon Shashua and Ziv Aviram was signed on February 1.
The SEC alleges that Mr. Waldman's trading behavior and other circumstantial evidence mean that he received material nonpublic information ahead of the acquisition. The information allegedly came from a defendant in another case, Jerusalem resident James Shaoul, who is a personal friend of Mr. Shashua and his wife.
Earlier this month, a U.S. judge signed off on an SEC request for international assistance from Israel. The SEC is asking for the help of the Israeli Judicial Authorities in obtaining witness testimonies from Mr. Shaoul and four other Israeli residents.
Mr. Waldman’s lawyer Gregory S. Bruch claimed in the court filing that the SEC allegations of insider trading fail to meet the pleading standards of federal civil procedure rules and should, therefore, be dismissed.
First, he said, the complaint does not provide enough precise details to support the accusation that he did indeed receive inside information. Furthermore, his communication with the alleged tipper Mr. Shaoul does not align closely with the trades he made.
Second, Mr. Waldman said, if such insider information was indeed passed on to him, the SEC did not convincingly show that the action violated a fiduciary duty or that Mr. Waldman knew or should have known that it was a violation. The SEC does not claim to know what information was passed to him or when that information was passed, he added.
Another rebuttal offered by Mr. Waldman’s legal team is that the SEC claimed that the fraudulent intent could be inferred based on the timing and size of the trades and the profits Mr. Waldman allegedly made, but none of those actions are inherently suspicious in themselves. Moreover, the SEC did not take into account alternative explanations when making the complaint, according to the defense.
Mr. Waldman's legal representation also asked that allegations regarding the original two defendants in the second Mobileye insider trading case be struck from the complaint pertaining to Mr. Waldman, as no communication existed between the three men.
Filed April, the second complaint alleges that Richmond, Virginia residents Lawrence F. Cluff, Jr. and Roger E. Shaoul bought Mobileye securities prior to the March announcement and sold the shares for a profit of $925,000 after receiving instructions from Mr. Shaoul's brother James.