Micron executive resigns after SEC accuses him of insider trading at his old job

[Update Nov. 5, 2017]

A high-ranking Micron Technology Inc. executive accused by the government of insider trading at his former employer has resigned, Micron said Sunday.

Anand Jayapalan was hired in August from SanDisk three months after Micron brought on SanDisk cofounder Sanjay Mehrotra to be its CEO. Micron spokesman Marc Musgrove said Jayapalan has been replaced as vice president of the company's storage business unit on an interim basis by Mike Rayfield, senior vice president of Micron's mobile business unit.

SanDisk, a Silicon Valley company that makes flash memory in competition with Micron, was bought last year by Western Digital Corp.

Jayapalan's resignation occurred sometime before Oct. 22, according to The Register, an information-technology website. Micron declined further comment.

The story below was originally published Oct. 2, 2017, under the headline, "He just started a top job at Micron. Now he's accused of insider trading at his old job."

The government has accused a top Micron Technology Inc. executive on the job for just six weeks of sharing insider information about his former employer that let his wife, aunt and uncle make hundreds of thousands of dollars on illegal stock trades.

The Securities and Exchange Commission sued Anand Jayapalan, whom Micron named on Aug. 21 as vice president of its storage business unit. He came to Micron from SanDisk, the Silicon Valley-based flash-memory maker co-founded by Sanjay Mehrotra, who was hired as Micron’s CEO in May.

Micron declined to say Monday if the lawsuit has affected Jayapalan’s status, whether Micron knew about the allegations when it hired him, or whether Mehrotra directed or suggested Jayapalan’s hiring.

“The litigation relates to the period of time when Mr. Jayapalan was employed at SanDisk, prior to his employment at Micron,” spokesman Marc Musgrove said. “As such it is not appropriate for us to comment on this pending litigation.”

According to the lawsuit, filed Friday in Los Angeles:

Jayapalan joined SanDisk in August 2013 as senior director of corporate strategy. He signed an agreement acknowledging that he must obey U.S. securities laws that prohibit the purchase or sale of securities by people who possess nonpublic information that could affect the securities’ value.

In May 2014, SanDisk promoted Jayapalan to general manager of enterprise storage. Around that time, SanDisk decided to buy Fusion Inc., a Salt Lake City company that SanDisk wanted for its flash data-storage technology.

That Memorial Day weekend, Jayapalan flew from SanDisk, based in Milpitas, south to his home in Simi Valley, as he typically did at the end of the work week. Twenty phone calls took place among the four defendants’ home phones and cellphones over the three-day weekend.

The Tuesday morning after the holiday, his aunt and uncle began buying Fusion stock. They bought more than 78,000 shares, including about 1,000 through a brokerage account shared by Jayapalan’s wife and aunt. The uncle, a physician whose practice was declining, owed nearly $100,000 in credit-card debt.

After SanDisk announced its purchase offer June 16, 2014, Fusion’s stock rose 22 percent. Soon after, Jayapalan’s aunt and uncle began selling the shares.

That October, SanDisk’s in-house counsel asked Jayapalan about his aunt and uncle’s names, which had appeared on list of names involved in the Fusion trades. He did not tell the counsel that he was related to them.

Jayapalan received “substantial personal benefit” from tipping his wife, aunt and uncle, the SEC said.

The lawsuit seeks to order all four defendants to give up the proceeds of the transactions and pay unspecified civil penalties.

The lawsuit was first reported by The Register, a London-based information-technology news service.

Attempts to reach Jayapalan or his attorney for comment were not immediately successful.

This story was originally published October 2, 2017 at 4:57 PM with the headline "Micron executive resigns after SEC accuses him of insider trading at his old job."