Facebook sacks employee for insider trading

According to the New York Times, Facebook has fired one of its senior employees, Michael Brown, for insider trading after he purchased shares through a secondary market which violated the company's policies. At the time, Brown was working within the corporate development area, his solicitor, Edward Swanson, said in an email statement written by his client "I did buy Facebook stock on the secondary market in early September 2010, and I did so with the absolute best of intentions and only because I believe in Facebook."

The story was first broken by TechCrunch which, at time of publishing, was claiming that the shares where bought just before Goldman Sachs started a $1.6 billion investment drive. It seems that Mr Brown saw this report and also made reference to it in his statement by saying "False and damaging information has been published about my actions," and that he had no idea about the financing drive "until it appeared in the press in January 2011."

A law professor from the Santa Clara University, Stephen Diamond, told the N.Y.T. "If the employee had material information which he did not share with the seller, he could be charged with violating the law." This news could also open a listening ear by the Securities and Exchange Commission (S.E.C.). Diamond added "This could be evidence that the control procedures in these markets are not sufficient."

Brown ended his statement by saying that he was "saddened by the course of events that led to my departure and the incorrect reporting of it," and that he is now "focused on moving on past this unfortunate series of events."

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17 Comments

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Hope he does time. I'm sick of how screwed up these markets are. It's all insider trading or you're only getting lucky.

Tim Dawg said,
Hope he does time. I'm sick of how screwed up these markets are. It's all insider trading or you're only getting lucky.

I hope many bankers do time. The bankers analyst tells the public that a stock is a good buy when it is time for the banks to dump their share. This is how banks make a lot of money. They buy low and when the stock made a huge move they show you that past performance so you buy into it. Then the stock crashes. And they new. How can a bank not know when an institution is in financial trouble. And the bank analyst will tell you that it was just your luck. Then even have the nerves to tell you this after 10 losses. It is your luck. And after 10 losses it is statistically impossible to chuck it up to luck. So as you see the markets are pretty predictable if you know how to listen. When they tell you to buy sell short. When they tell you to sell you buy.

Tim Dawg said,
Hope he does time. I'm sick of how screwed up these markets are. It's all insider trading or you're only getting lucky.

You know what the funny part is. They probably have a whole bunch of employees doing the same its just that they want to show to public how ethical they are by making one of them an example. Kind of what the city of a certain state is doing charging all these competitors i mean politicians with bribery and leaving their competitors i mean fellow politicians untouched.

things like this needs to happen more often... these businesspeople think they can get away with anything and everything....

excalpius said,
They can if they're Apple...

Remember how Steve Jobs hid his life-threatening medical condition from board members and stockholders until AFTER he'd recuperated, in clear violation of ALL of the SEC's full disclosure laws?

I'm not picking on Apple here, per se. I just wanted to point out that here is another example of unethical conduct and it seems as though the only reason that this guy is getting caught is either A) he's not at Apple, or B) Bush Jr. isn't in the White House to let such things slide...

Your thoughts?

As I said above, I'm just using Apple's recent ethical transgressions as examples of systemic problems to further the debate.

excalpius said,

Remember how Steve Jobs hid his life-threatening medical condition from board members and stockholders until AFTER he'd recuperated, in clear violation of ALL of the SEC's full disclosure laws?

I'm not picking on Apple here, per se. I just wanted to point out that here is another example of unethical conduct and it seems as though the only reason that this guy is getting caught is either A) he's not at Apple, or B) Bush Jr. isn't in the White House to let such things slide...

Your thoughts?

THat is true but you forget one thing. He also has the right to privacy. He doesn't have to disclose personal things. Medical condition is a very personal matter.

enocheed said,
He also has the right to privacy. He doesn't have to disclose personal things. Medical condition is a very personal matter.
You're wrong. He is bound by law to disclose his medical condition to the board members and stockholders.

enocheed said,

THat is true but you forget one thing. He also has the right to privacy. He doesn't have to disclose personal things. Medical condition is a very personal matter.

Tiagosilva29 is 100% correct. You lose a lot of things when you take your company public, as Apple is. One of those is that by law you must disclose EVERYTHING relevant to the stockholders....period.

So, he wanted to avoid any scrutiny, got caught and now claims he didn't do anything wrong?

Lets see how he fares in the courts. (Likely not well.)

He should hire Apple's lawyers immediately...you know the ones that got Apple's entire senior staff off their backdated stock offerings charges...ahem.

excalpius said,
He should hire Apple's lawyers immediately...you know the ones that got Apple's entire senior staff off their backdated stock offerings charges...ahem.

It doesn't matter who he hires. The use of secondary market is the one that says I am guilty. And fyi apple did it legally. It is legal to trade as long as it is by the rules. Insider trading has a guide line. You got to register your trades and got to stay in them a certain amount of time. To avoid this he used secondary market which makes the act illegal. So he is done based on this.