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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