The Commission filed a settled insider trading action against a husband who is alleged to have misappropriated inside information about a merger from his wife and then traded, reaping illegal profits of over $29,000. SEC v. Balchan, Civil Action No. 4:13-cv-298 (S.D. Tx. Filed Feb. 6, 2013).
The action centers on the acquisition of National Semiconductor Corporation by Texas Instruments, announced after the close of the market on April 4, 2011. Defendant James Balchan, an IT specialist, is married to a partner in a law firm. One of her partners, called Partner A in the complaint, was a close friend of the general counsel of National Semiconductor. In honor of his friend the general counsel, the Partner A organized a “wine and dine” weekend. Mr. Balchan and his wife were invited.
Prior to the event Partner A called his friend the general counsel. During the call the general counsel told him that he was working on the merger of his firm, National Semiconductor. He sought advice regarding certain regulatory requirements. By the end of the conversation the General Counsel noted that because of the pending merger he would have to cancel the social event.
Subsequently, Partner A advised Mrs. Balchan that the event would be canceled because of the pending acquisition. Mr. Balchan then learned about the deal from his wife. The information was shared in confidence, according to the complaint.
The next morning Mr. Balchan purchased 2,000 shares of National Semiconductor. Several days later he purchased another 1,000 shares.
Following the deal announcement by Texas Instruments the share price increased from about $14 to $26.06. This represented a premium to market of about 76%. Mr. Balchan had profits of $29,052.39. The Commission’s one count complaint alleges a violation of Exchange Act Section 10(b).
Mr. Balchan resolved the case, consenting to the entry of a permanent injunction based on the Section cited in the complaint. He also agreed to pay disgorgement of $29,052.39 along with prejudgment interest and a penalty equal to the amount of the disgorgement.