Newport man pays SEC after admitting insider trading

A Newport Beach man paid the U.S. Securities and Exchange Commission about $6,000 this summer after he admitted taking part in an insider-trading scheme that allegedly netted more than $200,000 and led to criminal charges for two others involved.

According to a complaint filed by the SEC in May, Michael Fleischli made $3,000 in about five hours when he bought stock in a company he knew his employer was about to buy.

Fleischli was working as a salesman in 2011 at Qualcomm Inc. in San Diego. At a meeting on Jan. 3, he and other members of the sales team learned the name of a company that Qualcomm was about to acquire, according to the SEC. They allegedly were told to keep the name confidential.

The next day, Fleischli bought 500 shares in Atheros Communications hours before news broke that Qualcomm was buying the business, the SEC said.

Two other salesmen, Derek Montague Cohen and Robert William Herman — both San Diego residents — also purchased Atheros securities, the SEC said.

“Specifically, Fleischli traded first, then Fleischli called Cohen, who then traded, and finally, Cohen then called Herman and then Herman traded,” the complaint said.

All three sold their shares within hours or days after Atheros’ stock shot up on news of the acquisition, according to federal court documents.

The SEC alleges Herman made almost $30,000 and Cohen walked away with a $200,000 profit.

In June this year, Fleischli admitted to committing a crime and agreed to settle with the SEC, according to court documents. He agreed to turn over the $3,000 he made from the trade and to pay a fine in the same amount.

Fleischli avoided criminal charges in the case. But Cohen and Herman were indicted by a grand jury and face felony charges of securities fraud on top of the SEC’s civil allegations.

In a plea deal this month, Herman changed his not-guilty plea to guilty, according to court records. He is scheduled to be sentenced in November.

Fleischli did not return a phone call Thursday seeking comment. The 44-year-old volunteers with the Newport Elementary School Foundation, for which he organized this year’s annual classic-car show that raises money for programs at the school.

Shelly Walshe, the foundation’s president, said she was unaware of Fleischli’s insider-trading case. His involvement in the foundation is limited to the one event, she said.