SEC v. Andreas Bechtolsheim, No. 5:24-cv-01845-PCP, Northern District of California (June 3, 2024) — Complaint

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MONIQUE C. WINKLER (Cal. Bar No. 213031)
  [email protected]
JASON H. LEE (Cal. Bar No. 253140)
   [email protected]
RAHUL KOLHATKAR (Cal. Bar No. 261781)
   [email protected]
JOHN P. MOGG (Cal. Bar No. 219875)
   [email protected]
44 Montgomery Street, Suite 2800
San Francisco, California 94104
Telephone:  (415) 705-2500
Facsimile:   (415) 705-2501

JOSEPH G. SANSONE (NY Bar No. 4043659)
  [email protected]
100 Pearl St., Suite 20-100
New York, New York 10004-2616
Telephone:  (212) 336-1100

Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

            v.

ANDREAS BECHTOLSHEIM,

Defendant.

Case No. C-

COMPLAINT

Plaintiff Securities and Exchange Commission (the “Commission”) alleges:
SUMMARY
1. This action concerns insider trading by Defendant Andreas “Andy” Bechtolsheim
(“Defendant” or “Bechtolsheim”) in the securities of Acacia Communications, Inc. (“Acacia”), a
maker of high-speed optical interconnect products whose stock was publicly traded.  Bechtolsheim,
the founder, Chief Architect and former Chairman of Arista Networks, Inc. (“Arista Networks”),
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

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OMPLAINT

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misappropriated material nonpublic information regarding the impending acquisition of Acacia and
used that information to trade Acacia securities the day before the announcement of Acacia’s
acquisition by Cisco Systems, Inc. (“Cisco”).  Bechtolsheim learned of this material nonpublic
information about Acacia’s impending acquisition through his confidential relationship with a
multinational technology company (“Tech Company A”) that was also considering an acquisition of
Acacia.
2. On July 8, 2019, a senior employee of Tech Company A (“Tech Company A
Manager”) contacted Bechtolsheim and confidentially discussed with him Acacia’s imminent
acquisition in the context of determining whether Tech Company A should submit a bid to acquire
Acacia.  Immediately after learning the material nonpublic information about Acacia’s imminent
acquisition and based on that information, Bechtolsheim traded Acacia option contracts in the
accounts of a close relative (“Relative”) and associate (“Associate”) just minutes before the market
closed.
3. On July 9, 2019, before market open, Acacia and Cisco announced that Cisco had
entered into a definitive agreement to acquire Acacia for $70 per share.  That day, Acacia’s stock
price increased by 35.1% and Bechtolsheim’s trading generated combined profits of $415,726 in the
accounts of the Relative and Associate.
4. By engaging in insider trading as described in this Complaint, Defendant violated
Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and
Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].
JURISDICTION AND VENUE
5. The Commission brings this action pursuant to Sections 21(d) and 21A of the
Exchange Act [15 U.S.C. §§ 78u(d) and 78u-1].
6. This Court has jurisdiction over this action pursuant to Sections 21(d), 21A, and 27 of
the Exchange Act [15 U.S.C. §§ 78u(d), 78u-1 and 78aa].
7. Defendant, directly or indirectly, made use of the means or instrumentalities of
interstate commerce, and of the mails, and of the facilities of a national securities exchange, in
connection with the transactions, acts, practices and courses of business alleged herein.

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OMPLAINT

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8. Venue in this District is proper pursuant to Section 27 of the Exchange Act [15 U.S.C.
§ 78aa], because a substantial part of the acts and transactions constituting the violations alleged in
this Complaint occurred within the Northern District of California.
INTRADISTRICT ASSIGNMENT
9. Under Civil Local Rule 3-2(e), this civil action should be assigned to the San Jose
Division, because a substantial part of the events which give rise to the claims alleged herein
occurred in Santa Clara County.
DEFENDANT
10. Bechtolsheim is 68 years old and resides in Incline Village, Nevada.  Bechtolsheim is
the founder of Arista Networks, Inc., a publicly-traded company, and currently serves as its Chief
Architect.  Bechtolsheim served as Chairman and Chief Development Officer of Arista Networks
from October 2008 to December 2023, when he resigned from these positions.  Bechtolsheim has
held high-level positions at other publicly-traded companies throughout his career, dating back to the
early 1980s when he helped found a large Silicon Valley based technology company.
RELEVANT ENTITIES
11. Acacia, incorporated in Delaware and now a subsidiary of Cisco, manufactures high-
speed optical interconnect products.  Before market open on July 9, 2019, Acacia and Cisco
announced that Acacia had entered into an agreement to be acquired by Cisco, and the acquisition
closed on March 1, 2021.  Prior to the closing of the acquisition, Acacia’s securities were listed on
the NASDAQ Global Select Market and the Chicago Board Options Exchange under the ticker
“ACIA.”  Acacia’s principal corporate offices are in Maynard, Massachusetts.
12. Arista Networks, incorporated in Delaware, provides cloud networking products and
makes ethernet switching and routing platforms.  Arista Networks’s stock is listed on the New York
Stock Exchange under the ticker “ANET.”  Arista Networks’s principal corporate offices are in Santa
Clara, California.
13. Cisco, incorporated in Delaware, makes products related to digital networking,
security, and cloud applications.  Cisco’s stock is listed on the NASDAQ Global Select Market under
the ticker “CSCO.”  Cisco’s principal corporate offices are in San Jose, California.

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OMPLAINT

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FACTUAL ALLEGATIONS
A. Bechtolsheim Learns Material Nonpublic Information Regarding Acacia’s Impending
Acquisition
14. Tech Company A and Arista Networks at all relevant times shared a confidential
business relationship.  Employees of Tech Company A and Arista Networks, including Tech
Company A Manager and Bechtolsheim, were bound by a non-disclosure agreement (“NDA”) to
maintain the confidentiality of information shared between the two companies and also had a history,
pattern, or practice of sharing confidential information with each other.  In this context, Tech
Company A Manager and Bechtolsheim shared confidential information with each other, and
understood that their conversations were subject to an NDA between their companies.
15. Tech Company A and Acacia engaged in confidential discussions concerning Tech
Company A’s potential acquisition of Acacia from April 2019 through July 8, 2019.  On the morning
of July 8, 2019,
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 a representative of Acacia contacted Tech Company A’s Chief Financial Officer
(“CFO”) to inform him that another company had made an offer to acquire Acacia and inquired
whether Tech Company A would be in a position to submit a competing offer for Acacia.
Immediately after this conversation, Tech Company A’s CFO called Tech Company A Manager to
discuss the potential impact of an acquisition of Acacia by another company on Tech Company A’s
business.  Tech Company A Manager suggested to the CFO that Tech Company A Manager contact
Bechtolsheim confidentially to help them assess the impact of an acquisition of Acacia.
16. Approximately one hour after Tech Company A’s CFO and Tech Company A
Manager spoke on July 8, 2019, Tech Company A Manager texted Bechtolsheim’s cell phone that he
“need[ed] to chat . . . rather urgent[ly] regarding a possible transaction in the optics space.”  Minutes
later, Bechtolsheim and Tech Company A Manager spoke by telephone and discussed the imminent
acquisition of Acacia as well as any potential impact on Tech Company A.
17. Bechtolsheim knew or was reckless in not knowing that the information he learned
about Acacia’s impending acquisition was material and nonpublic.  Bechtolsheim also knew or was

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 Unless otherwise stated, all times in this Complaint are in Pacific time.

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reckless in not knowing that he had a duty of trust and confidence to keep such information
confidential and not trade in Acacia securities based on this information.
18. Arista Networks’s insider trading policy, which Bechtolsheim acknowledged receiving
and reviewing, stressed that trading on the basis of material nonpublic information is illegal and
outlined potential penalties for insider trading.  Arista Networks’s insider trading policy also
specifically prohibited “misuse of any nonpublic information of other companies, such as [Arista
Networks’s] distributors, vendors, customers, collaborators, suppliers and competitors” and stated
that “nonpublic information . . . acquire[d] in the course of [employment] with [Arista Networks]
may only be used for legitimate . . . business purposes . . . [and] should be handled in accordance
with the terms of any relevant nondisclosure agreements.”  Bechtolsheim also received trainings at
Arista Networks concerning insider trading and the proper handling of nonpublic information.
B. Bechtolsheim Immediately Trades Acacia Option Contracts
19. A stock option, commonly referred to as an “option,” gives its purchaser-holder the
right to buy or sell shares of an underlying stock at a specified price prior to the expiration date.
Options are generally sold in “contracts,” which give the option holder the right to buy or sell 100
shares of an underlying stock.  The two types of stock options are calls and puts.
20. A “put” option gives the purchaser-holder of the option the right, but not the
obligation, to sell a specified amount of an underlying security at a specified price (i.e., the “strike
price”) within a specific time period before an expiration date.  Generally, the buyer of a put option
anticipates that the price of the underlying security will decrease during a specified period of time.
21. Although the purchase of a put option is a bearish trade, “writing,” or selling without
owning, a put option is bullish as the seller collects the proceeds (the “premium”) from the sale of the
put option and would keep those proceeds if the value of the put option does not increase in value.
Generally, when the underlying stock decreases in price, the value of related put options would
increase in value.  Conversely, an increase in the underlying stock price would generally lead to a
decrease in the value of the put option.  Writing put options is one method of profiting when an
investor believes that the underlying stock price will rise in value.

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22. Immediately after speaking with Tech Company A Manager on July 8, 2019, and
minutes before the market closed, Bechtolsheim called a brokerage firm where Relative maintained a
brokerage account and arranged to write Acacia put option contracts in Relative’s account.
23.  Between 12:56 PM and 12:58 PM on July 8, 2019, Bechtolsheim accessed Relative’s
account and wrote 400 Acacia put option contracts with a strike price of $50 and an expiration date of
July 19, 2019 for a premium of $95,396.  At 12:57 PM, Bechtolsheim simultaneously accessed the
brokerage account of Associate and wrote 200 Acacia put option contracts with a strike price of $65
and an expiration date of July 19, 2019 for a premium of $332,130.
24. Acacia’s stock traded between $47.51 and $48.41 on July 8, 2019.  Relative and
Associate had previously provided Bechtolsheim with authority to trade in these brokerage accounts
and were not aware of Bechtolsheim’s relevant Acacia trades at the time they were made.
25. On July 9, 2019, before market open, Acacia and Cisco announced to the public that
Cisco had entered into a definitive agreement to acquire Acacia for $70 per share.  That day, the price
of Acacia stock rose sharply and closed at $64.91 per share, a 35.1% increase from its $48.06 closing
price on the previous trading day.
26. A representative of Relative’s brokerage firm called Bechtolsheim on July 9, 2019 on
a recorded line to discuss Bechtolsheim’s profitable Acacia trades and mentioned that Cisco would
acquire Acacia for $70 per share.  Bechtolsheim stated on the call, “[T]he rumor I heard was [Tech
Company A] was going to buy [Acacia],” despite the fact that a potential acquisition of Acacia by
any party was not publicly known prior to the July 9, 2019 announcement.
27. The 600 put option contracts written by Bechtolsheim in the brokerage accounts of
Relative and Associate expired on July 19, 2019 and those accounts retained the premiums associated
with writing the put options.  As a result, Bechtolsheim’s trading generated combined profits of
$415,726 in Relative’s and Associate’s accounts.
FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
28. Paragraphs 1 through 27 are hereby re-alleged and are incorporated herein by
reference.

COMPLAINT 7 CASE NO. C-_________
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29.At the time of the trading described above, Bechtolsheim knew, or was reckless in not
knowing, that the information he learned about an imminent acquisition of Acacia was material and
nonpublic.  Bechtolsheim also knew or was reckless in not knowing that he was expected to maintain
the confidentiality of information that he learned related to the acquisition of Acacia and had a duty
of trust and confidence not to trade in Acacia securities on the basis of that information.
Bechtolsheim misappropriated the information about Acacia’s impending acquisition and
fraudulently breached his duty by writing put option contracts on the basis of that information.
30.By engaging in the conduct described above, Bechtolsheim, with scienter, in
connection with the purchase or sale of securities as set forth above, directly or indirectly:
a.employed devices, schemes, or artifices to defraud;
b.made untrue statements of material facts and omitted to state material facts necessary
in order to make the statements made, in light of the circumstances under which they
were made, not misleading; and
c.engaged in acts, practices, and courses of business which operated or would operate as
a fraud or deceit upon other persons, including purchasers and sellers of securities;
by the use of the means or instrumentalities of interstate commerce, and of the mails, and the
facilities of a national securities exchange.
31. By reason of the foregoing, Defendant, directly or indirectly, violated, and unless
restrained and enjoined, will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a final judgment:
I.
Finding that Defendant violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and
Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
II.
Permanently restraining and enjoining Defendant from directly or indirectly violating Section
10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

COMPLAINT 8 CASE NO. C-_________
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III.
Ordering, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], that
Defendant be prohibited from acting as an officer or director of any issuer that has a class of
securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required
to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].
IV.
Ordering Defendant to pay a civil monetary penalty pursuant to Section 21A of the Exchange
Act [15 U.S.C. § 78u-l].
V.
Retain jurisdiction of this action in accordance with the principles of equity and the Federal
R
ules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that
may be entered, or to entertain any suitable application or motion for additional relief within the
jurisdiction of this Court.
VI.
Granting such other and further relief as this Court may deem just, equitable, and necessary.
Dated: March 26, 2024                                      Respectfully submitted,
/S/ John P. Mogg
John P. Mogg
Attorney for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION

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MONIQUE C. WINKLER (Cal. Bar No. 213031) 
  [email protected] 
JASON H. LEE (Cal. Bar No. 253140) 
   [email protected] 
RAHUL KOLHATKAR (Cal. Bar No. 261781) 
   [email protected] 
JOHN P. MOGG (Cal. Bar No. 219875) 
   [email protected] 
44 Montgomery Street, Suite 2800 
San Francisco, California 94104 
Telephone:  (415) 705-2500  
Facsimile:   (415) 705-2501 
 
JOSEPH G. SANSONE (NY Bar No. 4043659) 
  [email protected] 
100 Pearl St., Suite 20-100 
New York, New York 10004-2616 
Telephone:  (212) 336-1100 
 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 

 
SECURITIES AND EXCHANGE COMMISSION, 
 

Plaintiff, 
 
 v. 
 
ANDREAS BECHTOLSHEIM,  
 

Defendant. 
 

 

Case No. C- 
 
 
 
COMPLAINT  
 
 
 

Plaintiff Securities and Exchange Commission (the “Commission”) alleges: 

SUMMARY 

1. This action concerns insider trading by Defendant Andreas “Andy” Bechtolsheim 

(“Defendant” or “Bechtolsheim”) in the securities of Acacia Communications, Inc. (“Acacia”), a 

maker of high-speed optical interconnect products whose stock was publicly traded.  Bechtolsheim, 

the founder, Chief Architect and former Chairman of Arista Networks, Inc. (“Arista Networks”), 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 

Case 5:24-cv-01845   Document 1   Filed 03/26/24   Page 1 of 8



 
 

COMPLAINT 
 

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misappropriated material nonpublic information regarding the impending acquisition of Acacia and 

used that information to trade Acacia securities the day before the announcement of Acacia’s 

acquisition by Cisco Systems, Inc. (“Cisco”).  Bechtolsheim learned of this material nonpublic 

information about Acacia’s impending acquisition through his confidential relationship with a 

multinational technology company (“Tech Company A”) that was also considering an acquisition of 

Acacia. 

2. On July 8, 2019, a senior employee of Tech Company A (“Tech Company A 

Manager”) contacted Bechtolsheim and confidentially discussed with him Acacia’s imminent 

acquisition in the context of determining whether Tech Company A should submit a bid to acquire 

Acacia.  Immediately after learning the material nonpublic information about Acacia’s imminent 

acquisition and based on that information, Bechtolsheim traded Acacia option contracts in the 

accounts of a close relative (“Relative”) and associate (“Associate”) just minutes before the market 

closed. 

3. On July 9, 2019, before market open, Acacia and Cisco announced that Cisco had 

entered into a definitive agreement to acquire Acacia for $70 per share.  That day, Acacia’s stock 

price increased by 35.1% and Bechtolsheim’s trading generated combined profits of $415,726 in the 

accounts of the Relative and Associate. 

4. By engaging in insider trading as described in this Complaint, Defendant violated 

Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and 

Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. 

JURISDICTION AND VENUE 

5. The Commission brings this action pursuant to Sections 21(d) and 21A of the 

Exchange Act [15 U.S.C. §§ 78u(d) and 78u-1]. 

6. This Court has jurisdiction over this action pursuant to Sections 21(d), 21A, and 27 of 

the Exchange Act [15 U.S.C. §§ 78u(d), 78u-1 and 78aa]. 

7. Defendant, directly or indirectly, made use of the means or instrumentalities of 

interstate commerce, and of the mails, and of the facilities of a national securities exchange, in 

connection with the transactions, acts, practices and courses of business alleged herein.   

Case 5:24-cv-01845   Document 1   Filed 03/26/24   Page 2 of 8



 
 

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8. Venue in this District is proper pursuant to Section 27 of the Exchange Act [15 U.S.C. 

§ 78aa], because a substantial part of the acts and transactions constituting the violations alleged in 

this Complaint occurred within the Northern District of California. 

INTRADISTRICT ASSIGNMENT 

9. Under Civil Local Rule 3-2(e), this civil action should be assigned to the San Jose 

Division, because a substantial part of the events which give rise to the claims alleged herein 

occurred in Santa Clara County. 

DEFENDANT 

10. Bechtolsheim is 68 years old and resides in Incline Village, Nevada.  Bechtolsheim is 

the founder of Arista Networks, Inc., a publicly-traded company, and currently serves as its Chief 

Architect.  Bechtolsheim served as Chairman and Chief Development Officer of Arista Networks 

from October 2008 to December 2023, when he resigned from these positions.  Bechtolsheim has 

held high-level positions at other publicly-traded companies throughout his career, dating back to the 

early 1980s when he helped found a large Silicon Valley based technology company. 

RELEVANT ENTITIES 

11. Acacia, incorporated in Delaware and now a subsidiary of Cisco, manufactures high-

speed optical interconnect products.  Before market open on July 9, 2019, Acacia and Cisco 

announced that Acacia had entered into an agreement to be acquired by Cisco, and the acquisition 

closed on March 1, 2021.  Prior to the closing of the acquisition, Acacia’s securities were listed on 

the NASDAQ Global Select Market and the Chicago Board Options Exchange under the ticker 

“ACIA.”  Acacia’s principal corporate offices are in Maynard, Massachusetts.   

12. Arista Networks, incorporated in Delaware, provides cloud networking products and 

makes ethernet switching and routing platforms.  Arista Networks’s stock is listed on the New York 

Stock Exchange under the ticker “ANET.”  Arista Networks’s principal corporate offices are in Santa 

Clara, California. 

13. Cisco, incorporated in Delaware, makes products related to digital networking, 

security, and cloud applications.  Cisco’s stock is listed on the NASDAQ Global Select Market under 

the ticker “CSCO.”  Cisco’s principal corporate offices are in San Jose, California. 

Case 5:24-cv-01845   Document 1   Filed 03/26/24   Page 3 of 8



 
 

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FACTUAL ALLEGATIONS 

A. Bechtolsheim Learns Material Nonpublic Information Regarding Acacia’s Impending 
Acquisition 

14. Tech Company A and Arista Networks at all relevant times shared a confidential 

business relationship.  Employees of Tech Company A and Arista Networks, including Tech 

Company A Manager and Bechtolsheim, were bound by a non-disclosure agreement (“NDA”) to 

maintain the confidentiality of information shared between the two companies and also had a history, 

pattern, or practice of sharing confidential information with each other.  In this context, Tech 

Company A Manager and Bechtolsheim shared confidential information with each other, and 

understood that their conversations were subject to an NDA between their companies. 

15. Tech Company A and Acacia engaged in confidential discussions concerning Tech 

Company A’s potential acquisition of Acacia from April 2019 through July 8, 2019.  On the morning 

of July 8, 2019,1 a representative of Acacia contacted Tech Company A’s Chief Financial Officer 

(“CFO”) to inform him that another company had made an offer to acquire Acacia and inquired 

whether Tech Company A would be in a position to submit a competing offer for Acacia.  

Immediately after this conversation, Tech Company A’s CFO called Tech Company A Manager to 

discuss the potential impact of an acquisition of Acacia by another company on Tech Company A’s 

business.  Tech Company A Manager suggested to the CFO that Tech Company A Manager contact 

Bechtolsheim confidentially to help them assess the impact of an acquisition of Acacia. 

16. Approximately one hour after Tech Company A’s CFO and Tech Company A 

Manager spoke on July 8, 2019, Tech Company A Manager texted Bechtolsheim’s cell phone that he 

“need[ed] to chat . . . rather urgent[ly] regarding a possible transaction in the optics space.”  Minutes 

later, Bechtolsheim and Tech Company A Manager spoke by telephone and discussed the imminent 

acquisition of Acacia as well as any potential impact on Tech Company A. 

17. Bechtolsheim knew or was reckless in not knowing that the information he learned 

about Acacia’s impending acquisition was material and nonpublic.  Bechtolsheim also knew or was 

 

1 Unless otherwise stated, all times in this Complaint are in Pacific time. 

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reckless in not knowing that he had a duty of trust and confidence to keep such information 

confidential and not trade in Acacia securities based on this information. 

18. Arista Networks’s insider trading policy, which Bechtolsheim acknowledged receiving 

and reviewing, stressed that trading on the basis of material nonpublic information is illegal and 

outlined potential penalties for insider trading.  Arista Networks’s insider trading policy also 

specifically prohibited “misuse of any nonpublic information of other companies, such as [Arista 

Networks’s] distributors, vendors, customers, collaborators, suppliers and competitors” and stated 

that “nonpublic information . . . acquire[d] in the course of [employment] with [Arista Networks] 

may only be used for legitimate . . . business purposes . . . [and] should be handled in accordance 

with the terms of any relevant nondisclosure agreements.”  Bechtolsheim also received trainings at 

Arista Networks concerning insider trading and the proper handling of nonpublic information. 

B. Bechtolsheim Immediately Trades Acacia Option Contracts 

19. A stock option, commonly referred to as an “option,” gives its purchaser-holder the 

right to buy or sell shares of an underlying stock at a specified price prior to the expiration date.   

Options are generally sold in “contracts,” which give the option holder the right to buy or sell 100 

shares of an underlying stock.  The two types of stock options are calls and puts.  

20. A “put” option gives the purchaser-holder of the option the right, but not the 

obligation, to sell a specified amount of an underlying security at a specified price (i.e., the “strike 

price”) within a specific time period before an expiration date.  Generally, the buyer of a put option 

anticipates that the price of the underlying security will decrease during a specified period of time. 

21. Although the purchase of a put option is a bearish trade, “writing,” or selling without 

owning, a put option is bullish as the seller collects the proceeds (the “premium”) from the sale of the 

put option and would keep those proceeds if the value of the put option does not increase in value.  

Generally, when the underlying stock decreases in price, the value of related put options would 

increase in value.  Conversely, an increase in the underlying stock price would generally lead to a 

decrease in the value of the put option.  Writing put options is one method of profiting when an 

investor believes that the underlying stock price will rise in value. 

Case 5:24-cv-01845   Document 1   Filed 03/26/24   Page 5 of 8



 
 

COMPLAINT 
 

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22. Immediately after speaking with Tech Company A Manager on July 8, 2019, and 

minutes before the market closed, Bechtolsheim called a brokerage firm where Relative maintained a 

brokerage account and arranged to write Acacia put option contracts in Relative’s account.  

23.  Between 12:56 PM and 12:58 PM on July 8, 2019, Bechtolsheim accessed Relative’s 

account and wrote 400 Acacia put option contracts with a strike price of $50 and an expiration date of 

July 19, 2019 for a premium of $95,396.  At 12:57 PM, Bechtolsheim simultaneously accessed the 

brokerage account of Associate and wrote 200 Acacia put option contracts with a strike price of $65 

and an expiration date of July 19, 2019 for a premium of $332,130.   

24. Acacia’s stock traded between $47.51 and $48.41 on July 8, 2019.  Relative and 

Associate had previously provided Bechtolsheim with authority to trade in these brokerage accounts 

and were not aware of Bechtolsheim’s relevant Acacia trades at the time they were made. 

25. On July 9, 2019, before market open, Acacia and Cisco announced to the public that 

Cisco had entered into a definitive agreement to acquire Acacia for $70 per share.  That day, the price 

of Acacia stock rose sharply and closed at $64.91 per share, a 35.1% increase from its $48.06 closing 

price on the previous trading day.   

26. A representative of Relative’s brokerage firm called Bechtolsheim on July 9, 2019 on 

a recorded line to discuss Bechtolsheim’s profitable Acacia trades and mentioned that Cisco would 

acquire Acacia for $70 per share.  Bechtolsheim stated on the call, “[T]he rumor I heard was [Tech 

Company A] was going to buy [Acacia],” despite the fact that a potential acquisition of Acacia by 

any party was not publicly known prior to the July 9, 2019 announcement. 

27. The 600 put option contracts written by Bechtolsheim in the brokerage accounts of 

Relative and Associate expired on July 19, 2019 and those accounts retained the premiums associated 

with writing the put options.  As a result, Bechtolsheim’s trading generated combined profits of 

$415,726 in Relative’s and Associate’s accounts.    

FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

28. Paragraphs 1 through 27 are hereby re-alleged and are incorporated herein by 

reference. 

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COMPLAINT 7 CASE NO. C-_________

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29. At the time of the trading described above, Bechtolsheim knew, or was reckless in not

knowing, that the information he learned about an imminent acquisition of Acacia was material and 

nonpublic.  Bechtolsheim also knew or was reckless in not knowing that he was expected to maintain 

the confidentiality of information that he learned related to the acquisition of Acacia and had a duty 

of trust and confidence not to trade in Acacia securities on the basis of that information.  

Bechtolsheim misappropriated the information about Acacia’s impending acquisition and 

fraudulently breached his duty by writing put option contracts on the basis of that information.   

30. By engaging in the conduct described above, Bechtolsheim, with scienter, in

connection with the purchase or sale of securities as set forth above, directly or indirectly: 

a. employed devices, schemes, or artifices to defraud;

b. made untrue statements of material facts and omitted to state material facts necessary

in order to make the statements made, in light of the circumstances under which they

were made, not misleading; and

c. engaged in acts, practices, and courses of business which operated or would operate as

a fraud or deceit upon other persons, including purchasers and sellers of securities;

by the use of the means or instrumentalities of interstate commerce, and of the mails, and the 

facilities of a national securities exchange. 

31. By reason of the foregoing, Defendant, directly or indirectly, violated, and unless 

restrained and enjoined, will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C.  

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a final judgment: 

I. 

Finding that Defendant violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and 

Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

II. 

Permanently restraining and enjoining Defendant from directly or indirectly violating Section 

10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

Case 5:24-cv-01845   Document 1   Filed 03/26/24   Page 7 of 8



COMPLAINT 8 CASE NO. C-_________

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III. 

Ordering, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], that 

Defendant be prohibited from acting as an officer or director of any issuer that has a class of 

securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required 

to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]. 

IV. 

Ordering Defendant to pay a civil monetary penalty pursuant to Section 21A of the Exchange 

Act [15 U.S.C. § 78u-l]. 

V. 

Retain jurisdiction of this action in accordance with the principles of equity and the Federal 

Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that 

may be entered, or to entertain any suitable application or motion for additional relief within the 

jurisdiction of this Court. 

VI. 

Granting such other and further relief as this Court may deem just, equitable, and necessary. 

Dated: March 26, 2024     Respectfully submitted, 

/S/ John P. Mogg 
John P. Mogg 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 

Case 5:24-cv-01845   Document 1   Filed 03/26/24   Page 8 of 8