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SECURITIES AND EXCHANGE COMMISSIONLitigation Release No. 17243 / November 19, 2001SECURITIES AND EXCHANGE COMMISSION v. ROBERT J. PREVETT, ET AL., United States District Court for the Northern District of California, Civil Action No. C-01-21069-PVT SECURITIES AND EXCHANGE COMMISSION v. DAVID CHANG, ET AL., United States District Court for the Northern District of California, Civil Action No. C-01-21071-PVT SECURITIES AND EXCHANGE COMMISSION v. GEOFFREY CHANG, ET AL., United States District Court for the Northern District of California, Civil Action No. C-01-21070-RS SECURITIES AND EXCHANGE COMMISSION v. ATUL BHAGAT, ET AL., United States District Court for the Northern District of California, Civil Action No. C-01-21073-RS SECURITIES AND EXCHANGE COMMISSION v. KEN C. CHOW, ET AL., United States District Court for the Northern District of California, Civil Action No. C-01-21067-PVT SECURITIES AND EXCHANGE COMMISSION v. MARK APTON, ET AL., United States District Court for the Northern District of California, Civil Action No. C-01-21068-PVT SECURITIES AND EXCHANGE COMMISSION v. EVAN K. LAU, United States District Court for the Northern District of California, Civil Action No. C-01-21072-PVT The Securities and Exchange Commission today announced the filing of seven civil complaints against 15 persons for insider trading in the securities of nVIDIA Corporation, a Santa Clara, California maker of computer graphics processors. The actions allege that the defendants (including 11 nVIDIA employees and four tippees) traded after learning, in March 2000, that nVIDIA had just won a lucrative contract to provide graphics components for Microsoft Corporation's new video game console, the X-Box. Collectively, the defendants earned more than $1.7 million in illegal profits. Simultaneous with the filing of the complaints, the Commission also announced settlements with two of the defendants. According to today's filings, on Sunday, March 5, 2000, nVIDIA and Microsoft entered into an agreement providing for nVIDIA to design and manufacture computer graphics components for Microsoft's X-Box. That evening, nVIDIA's president and chief executive officer sent an email entitled "X is Ours!" to all nVIDIA employees, informing them of the agreement and its expected revenue impact on nVIDIA. The next morning, March 6, nVIDIA's vice president of marketing sent an email to all nVIDIA employees reminding them that news of the X-Box agreement was confidential. On the morning of March 6, 2000, after receiving both emails, the 11 employee defendants began to buy nVIDIA stock. In addition, three of the employee defendants tipped a total of four friends and relatives, who also bought nVIDIA stock. From March 7 through March 9, 2000, nVIDIA's share price soared, as rumors about the X-Box contract circulated on the Internet and in the press. After Microsoft announced the X-Box agreement to the public on the morning of March 10, 2000, nVIDIA shares continued to rise, closing that day at $118 per share, more than twice the closing price on March 6. Today's actions allege insider trading against the following defendants:
Today's filings also allege that, in December 1999 and February 2000, nVIDIA's president and chief executive officer distributed earlier company-wide emails apprising nVIDIA employees of the status of negotiations with Microsoft concerning the X-Box contract. According to the complaints, Prevett, Geoffrey Chang, David Chang, and Evan Kong Lau also traded nVIDIA securities based on this inside information. The actions announced today follow the Commission's August 2000 complaint against Manu Shrivastava, a former nVIDIA engineer who also traded based on inside information concerning nVIDIA's win of the Microsoft X-Box contract. In November 2000, Shrivastava pleaded guilty to one count of securities fraud in a parallel criminal action brought by the United States Attorney's Office for the Northern District of California. The Commission's lawsuit against Shrivastava is currently in litigation. The Commission seeks disgorgement of defendants' profits, plus interest, civil monetary penalties for insider trading, and an order from the court permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
http://www.sec.gov/litigation/litreleases/lr17243.htm
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