SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16669 / August 30, 2000
SECURITIES AND EXCHANGE COMMISSION v. MANU B. SHRIVASTAVA, United
States District Court for the Northern District of California, Civil
Action No. 00 20904 PVT
The Securities and Exchange Commission today filed a lawsuit alleging
insider trading by Manu B. Shrivastava, a former engineer at nVIDIA
Corporation. The action alleged that Shrivastava earned $446,724 in
illegal profits by trading on inside information about a contract
nVIDIA had entered into with Microsoft Corporation. Shrivastava, age
31, lives in San Jose, California. nVIDIA, a company based in Santa
Clara, California, designs and builds computer graphic components.
According to the Commission's complaint, on Sunday, March 5, 2000,
nVIDIA and Microsoft entered into an agreement providing for nVIDIA to
design and manufacture the 3D computer graphics and multimedia
sub-system for Microsoft's new video game console, the "X-Box." That
evening, nVIDIA's president and chief executive officer sent an email
entitled "X is Ours!" to all nVIDIA employees to inform them of the
agreement and its huge revenue impact on nVIDIA. The next morning, on
Monday, March 6, nVIDIA's vice president of marketing sent an email to
all nVIDIA employees entitled "xbox shhhhh...," reminding them that
news of the X-Box agreement was confidential.
The complaint further alleges that on the morning of Monday, March 6,
2000, after reading both emails, Shrivastava began to acquire
short-term nVIDIA call option contracts through an online brokerage
account. In all, he spent nearly $31,000 acquiring 100 short-term
nVIDIA call option contracts.
From March 7 through March 9, as rumors about the X-Box contract
circulated on the Internet and in the press, nVIDIA's share price
soared 71.4% to a March 9 closing price of $100.30. After Microsoft
announced the X-Box agreement to the public on the morning of March
10, nVIDIA shares rose an additional 17.6% to close that day at $118,
more than twice the closing share price on the day that Shrivastava
made his options purchases. Shrivastava sold all 100 nVIDIA call
option contracts between March 7 and March 10, realizing illegal
profits of $446,724.
The Commission seeks disgorgement of Shrivastava's profits, plus
interest, civil monetary penalties for insider trading, and an order
from the court permanently enjoining Shrivastava from violating
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder.
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION v. MANU B. SHRIVASTAVA, United States District Court for
The Securities and Exchange Commission today filed a lawsuit alleging insider trading by Manu
The action alleged that Shrivastava earned $446,724 in illegal profits by trading on inside
Shrivastava, age 31, lives in San Jose, California.
nVIDIA, a company based in Santa Clara, California, designs and builds computer graphic
According to the Commission's complaint, on Sunday, March 5, 2000, nVIDIA and Microsoft
nVIDIA's president and chief executive officer sent an email entitled "X is Ours!"
to all nVIDIA employees to inform them of the agreement and its huge revenue impact on nVIDIA.
The complaint further alleges that on the morning of Monday, March 6, 2000, after reading
From March 7 through March 9, as rumors about the X-Box contract circulated on the Internet
The Commission seeks disgorgement of Shrivastava's profits, plus interest, civil monetary
The U.S. Attorney for the Northern District of California filed a parallel criminal complaint
The maximum statutory penalty for securities fraud is ten years' imprisonment; wire fraud
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