Two charged in Microsoft insider trading scheme

SEATTLE -- Two men, including one former Microsoft employee, were charged with 35 counts of insider trading Thursday in U.S. District Court. According to the U.S. Attorney's Office, the men made nearly $400,000 in profits through the illegal purchases and sales of stock options.

According to the charges, 32-year-old Brian Jorgenson of Lynnwood was employed as senior manager for Microsoft's Treasury Group and used that position to provide nonpublic information to 28-year-old Sean Stokke of Seattle, a day trader Jorgenson previously worked with at an asset management company.

Jorgenson and Stokke committed three instances of insider trading, for which Jorgenson was paid in $10,000 envelopes of cash, according to the U.S. Attorney's Office.

According to the charges, the pair used advanced knowledge of Microsoft's investment in Barnes and Noble to make a profit of more than $184,000. They used Microsoft's failure to meet earnings estimates in the fourth quarter of 2013 to make another $195,000 in profits and its increase in first-quarter earnings in fiscal 2013 to make $10,000, according to the charges.

"For every stock market winner, there is a loser, and trading on confidential inside information is a cheater's way of gaining at the expense of others," U.S. Attorney Jenny Durkan said in a press release. "This conduct hurts companies, hurts individuals and shakes faith in our financial markets."

Insider trading is punishable by up to 20 years in prison and a $5 million fine.

In addition, the Securities and Exchange Commission filed a civil action against Stokke and Jorgenson Thursday.