NEWS21 July 2009

Former Qualcomm analysis director charged with insider trading

Legal North America

US— The Securities and Exchange Commission (SEC) has charged wireless technology firm Qualcomm’s former director of strategic marketing analysis, Andres Leyva, with insider trading.

The SEC’s complaint alleges that Leyva made more than $34,000 in illegal profits by trading on the basis of confidential information about a forthcoming settlement between Qualcomm and Nokia.

According to the SEC’s complaint, the two firms were set to go to trial in July last year to decide if Nokia owed Qualcomm “substantial” royalty revenues from a previous licensing agreement that ended in 2007. The day before the trial a senior Qualcomm executive allegedly told Leyva that Nokia had made a surprise settlement offer, including a proposal to increase an upfront payment to Qualcomm from $500m to $2.5bn.

Two hours after being told of the proposal, the complaint alleges, Leyva purchased 80 Qualcomm call option contracts for $0.39 each, which gave him the right to buy company shares at a price of $50.

After Qualcomm and Nokia announced their agreement the following day, Qualcomm’s stock rose 17% to $52.43, and, according to the SEC, Leyva sold all 80 options for a profit of just over $34,000.

The SEC is seeking a permanent injunction against Leyva, as well as forcing him to give up his profits and pay civil penalties.

Qualcomm had not responded to a request from Research for comment at the time of publication.