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
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.
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