Former Microsoft employee, friend, charged with insider trading

A former Microsoft finance manager and a day-trading friend appeared in federal court yesterday in Seattle on charges of using insider information to raise seed money for a hedge fund.

Brian Jorgenson, 32, and Sean Stokke, 28, had been charged with 35 counts each of insider trading, alleging they had made nearly $400,000 in three market transactions that used secret financial information Jorgenson was privy to as a senior manager at Microsoft's Finances Group.

Jorgenson drew $130,000 a year when he was at Microsoft.

The Securities and Exchange Commission (SEC) has meanwhile, filed a lawsuit against the men in federal court, seeking seizure of any illegal profits.

In an interview with The Seattle Times on Tuesday, Jorgenson admitted to the crimes but did not reveal the identity of his friend, who is known only as a ''day trader'' who had previously worked with Jorgenson at a Seattle asset-management group.

Stokke put in a court appearance with public defender Jennifer Horowitz, who was appointed to represent him. He told the judge the stock funds listed on a financial-disclosure sheet had been seized by the government.

Jorgenson had worked at Microsoft for three years and was fired after his link to the trades was discovered.

According to prosecutors, Jorgenson, a senior portfolio manager at Microsoft, passed information to the former colleague, Stokke, an online day trader, who executed the trades.

According to the DoJ and the SEC, the scheme started in April 2012 when Jorgenson, 32, came to know through his job at the treasury department that the software company was planning an investment in the digital business of bookseller Barnes and Noble Inc.

He passed on the information to Stokke, now 28, who bought options betting on a rise in Barnes and Noble stock, which jumped 49 per cent when the investment was announced in late April. Stokke raked in a profit of over $184,000, according to prosecutors.

The duo went on to repeat the process twice more in the following 18 months, according to  prosecutors.

They bought Microsoft and index options prior to earnings that Jorgenson knew would surprise Wall Street and together the two men took in another $208,000 or so in profit from the trades, according to the complaint filed by prosecutors.

''For every stock market winner, there is a loser, and trading on confidential inside information is a cheater's way of gaining at the expense of others,'' US attorney Jenny A Durkan said in a statement.