A former Yahoo executive Robert W. K. Kwok and a former mutual fund manager for a finance company Reema D. Shah have agreed to plead guilty in an insider trading charges, US regulators said.
Kwok and 40-year-old Shah of former mutual fund manager at a subsidiary of Ameriprise Financial Inc, have agreed to settle the charges by US Securities and Exchange Commission (SEC), a release said.
The SEC, in its release, alleged that Kwok, who was Yahoo's senior director of business management, breached his duty to the company when he told Reema D. Shah in July 2009 that a deal between Yahoo and Microsoft would be announced
"Shah had reached out to Kwok amid market rumors of an impending partnership between the two companies, and Kwok told her the information was kept quiet at Yahoo and only a few people knew of the coming announcement.
"Based on Kwok's illegal tip, Shah prompted the mutual funds she managed to buy more than 7,00,000 shares of Yahoo stock that were later sold for profits of approximately USD 3,89,000", the SEC release added.
The SEC further alleges that a year earlier, the roles were reversed.
"Shah tipped Kwok with material nonpublic information about an impending acquisition announcement between two other companies. Kwok traded in a personal account based on the confidential information for profits of $4,754", it said.
Kwok and Shah, who live in California, have agreed to settle the SEC's charges, it said.
"Financial penalties and disgorgement will be determined by the court at a later date" the SEC release said.
Under the settlements, Shah will be permanently barred from the securities industry and Kwok will be permanently barred from serving as an officer or director of a public company, it said.