May 14, 2007, 9:10 PM — A former vice president of Oracle Corp. agreed on Monday to settle federal charges and pay US$198,000 for allegedly making stock market profits by using insider information he learned from his wife.
Christopher Balkenhol, 40, heard about Oracle's secret plans to acquire other companies from his wife, who was the executive assistant to Oracle's top three executives during 2004 and 2005, according to the insider trading lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in U.S. District Court for the Northern District of California.
The three, who were not named in the lawsuit but whose titles were given, were CEO Larry Ellison and co-presidents Charles Phillips and Safra Catz. The SEC lawsuit does not bring charges against those three or against Balkenhol's wife.
Balkenhol's wife scheduled confidential meetings between those three managers and their attorneys, investment bankers and executives at the target companies, and even wrote the news releases announcing the acquisitions. She then mentioned these details to her husband, who used the information for himself, the SEC said.
"Balkenhol owed a duty of trust to his wife, and violated this duty by using information he obtained from her in confidence for personal profit," the lawsuit says.
"The commission does not allege that Balkenhol's wife knew about Balkenhol's illicit trades. Rather, the complaint alleges that Balkenhol breached a duty not to misuse confidences gleaned from his wife for his own gain," the SEC said in a statement.
Oracle spokeswoman Deborah Hellinger declined to give any comment on the case or to indicate whether Balkenhol's wife is still employed at the company.
According to the SEC complaint, Balkenhol made nearly $100,000 in illegal profit in 2004 and 2005 when he bought stock in companies that his wife knew Oracle wanted to acquire. Those stock prices jumped when the news broke, and Balkenhol quickly sold his shares.
Using this method, he purchased $448,000 in shares of Siebel Systems Inc. between June and September of 2005. Soon after Oracle announced the deal Sept. 12 of that year, Balkenhol sold his shares for an illegal profit of $82,000, the SEC said.
He used the same pattern earlier to collect $85,000 of shares in Retek Inc. in March 2005, making $15,000 in profit after Oracle announced that it planned to make a bid for the company, according to the lawsuit.
Balkenhol could have potentially traded in many more deals -- Oracle bought nine companies, including PeopleSoft, during the lawsuit span from November 2004 to September 2005, according to the company's Web site.
In fact, he also bought stock in a third company, but sold it at the same price when Oracle's deal to buy it fell through, the SEC said. That company was not named in the suit.
Although Balkenhol's system was successful, it was not subtle. SEC investigators pay special attention to the spouses and close family members of highly placed corporate employees, since they often hold confidential information they know could affect the stock market, said Helane Morrison, regional director of the SEC's San Francisco office.
