Genesis Microchip CEO and childhood friend charged with insider trading

The former president and chief executive of Genesis Microchip and a friend of his were charged by the Securities and Exchange Commission with insider trading in the company’s shares in the midst of confidential merger negotiations between Genesis and STMicroelectronics, one of the world’s largest semiconductor companies.

Genesis CEO and San Jose resident Elias Antoun allegedly bought shares of his companies stock in the brokerage accounts of a relative and a friend shortly after the company received a letter of intent under which STM would acquire Genesis, a supplier of image processors for flat-panel TVs and monitors, at a “significant premium” above Genesis’ current stock price.

According to the complaint in the matter, filed in federal court in San Jose today, Genesis first approached  STM about a possible merger in June 2007. Antoun met with representatives of STM in Santa Clara in late July 2007 and again in Paris in late August 2007, when they signed a confidentiality agreement at the August meeting. In November, Genesis received a letter of intent from STM proposing to buy Genesis for $9.50 per shares.  The final price settled on was $8.65.

The SEC alleges that Antoun discussed the pending merger in confidence with childhood friend Samir Abed, who, without telling Antoun, used the information to purchase shares of Genesis stock and call options. After news of the merger was announced on Dec. 11, 2007, Genesis’s stock price skyrocketed 57 percent.  Antoun sold the Genesis stock in his relative’s and friend’s accounts, and Abed sold his Genesis stock and options shortly after the news, making “thousands of dollars in illicit profits” in the process.

Both men have agreed to settle their respective matters, without, of course, admitting or denying the SEC charges. Antoun has agreed to pay $37,299.42 in disgorgement and prejudgment interest related to profits from the sales and a penalty of $36,210.  Abed has agreed to pay $53,362.62 and a penalty of $25,603.Antoun has agreed to pay $37,299.42 in disgorgement and prejudgment interest (which includes profits from a previous trade prior to a Genesis earnings announcement) and a financial penalty of $36,210.  Abed has agreed to pay $53,362.62 in disgorgement and prejudgment interest and a penalty of $25,603.  Both Antoun and Abed have also agreed to be enjoined from future violations of the securities laws.

 

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