| SEATTLE, July 25
SEATTLE, July 25 An online stock trader who
profited from inside information passed to him by a former
Microsoft Corp finance employee was sentenced to 1-1/2
years in prison in Seattle on Friday.
Sean Stokke had pleaded guilty to charges of insider
trading, which federal prosecutors said netted more than
$400,000 in illicit profits over an 18-month period for him and
his Microsoft accomplice, Brian Jorgenson.
Prosecutors had asked for a 1-1/2 year sentence for Stokke,
29, far short of the maximum prison sentence of 20 years for the
charges of criminal insider trading, given his cooperation with
investigators. Stokke's attorney had asked for greater leniency.
In handing down the sentence during a hearing in Seattle,
U.S. District Judge Marsha Pechman said a prison term was vital
to "send a message" to employees at local companies who might be
tempted by insider trading.
Jorgenson, 32, who was fired by Microsoft after the scheme
came to light, is set to be sentenced in the next few weeks.
The U.S. Department of Justice and the Securities and
Exchange Commission jointly charged the two men in December with
a sophisticated insider trading scheme. Stokke struck a plea
deal with prosecutors in April, providing details of the scheme.
According to charging documents, the pair's cooperation
began in April 2012 when Jorgenson found out through his job in
Microsoft's treasury department that the software company was
planning a multi-million-dollar investment in the digital
business of bookseller Barnes & Noble Inc.
He passed that information to Stokke, who bought options
betting that Barnes & Noble's stock would rise. The stock jumped
about 50 percent when the investment was announced in late April
2012, reaping Stokke a profit of more than $184,000, prosecutors
Stokke, who had previously worked with Jorgenson at an asset
management company, shared the profits with his partner via
envelopes stuffed with $10,000 in cash, according to the
charges, which resulted from probes by the Federal Bureau of
Investigation and the SEC.
The pair repeated a similar process twice more in the
following 18 months, prosecutors said, buying options on
Microsoft stock or an exchange-traded fund prior to the release
of earnings that Jorgenson knew would surprise Wall Street and
cause sharp moves in the stock.
The two men took in a total profit of $414,000 from the
combined trades and planned to start their own hedge fund,
according to prosecutors.
The case is United States of America v Sean T. Stokke, case
number 2:14-cr-00099-MJP in the U.S. District Court for the
Western District Of Washington.
(Reporting by Bill Rigby; Editing by Leslie Adler)