U.S Attorney's Office
Southern District of New York
(212) 637-2600
October 16, 2014

Former Hedge Fund Analyst Sentenced to Five Years in Prison for Participating in Insider Trading Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced that MATTHEW TEEPLE, a former analyst for San Francisco-based hedge fund Artis Capital Management, L.P. (“Artis”), was sentenced today to five years in prison for participating in an insider trading scheme that yielded tens of millions of dollars in ill-gotten gains. When he pled guilty in May 2014, TEEPLE admitted that in 2008 he repeatedly gathered and passed to Artis inside information about Foundry Networks, Inc. (“Foundry”), a technology company located in Santa Clara, California, which he had obtained from David Riley, Foundry’s Chief Information Officer at the time. This inside information included the fact—before it became public on July 21, 2008—that Brocade Communications, Inc. (“Brocade”) was planning to acquire Foundry. On October 2, 2014, following a 13-day jury trial before U.S. District Judge Valerie E. Caproni, Riley was convicted of crimes related to his role in the scheme with which he and TEEPLE were charged together. TEEPLE’s sentence today was imposed by U.S. District Judge Robert P. Patterson, who accepted TEEPLE’s guilty plea in May.

Manhattan U.S. Attorney Preet Bharara said: “Matthew Teeple flagrantly and repeatedly traded on inside information he received from a Foundry Networks, Inc. insider and convicted tipster, David Riley. With today’s sentence, Teeple joins a growing group of professionals who have forfeited their freedom for making a mockery of market rules.”

According to the agreement pursuant to which TEEPLE entered his plea of guilty, other documents filed in Manhattan federal court, and statements made during court proceedings:

From 2005 and continuing through 2008, TEEPLE gathered from Riley sensitive, nonpublic information about Foundry—specifically, its monthly and quarterly sales data and secrets relating to its impending acquisition by Brocade. As CIO and a Vice President at Foundry, Riley had access to Foundry’s sales performance numbers well before they became public and—along with only a handful of other Foundry employees—learned of the Brocade deal before it was announced publicly. TEEPLE gathered these sales- and Brocade-related secrets from Riley over the telephone and in meetings the two held in the San Jose, California, area. On several occasions, TEEPLE spoke with Riley while Riley was logged into the database that Foundry used to maintain sensitive financial information.

TEEPLE passed the inside information he received from Riley on to others, including others at Artis. From the inside information TEEPLE provided about Foundry, Artis ultimately reaped gains and avoided losses of over $36 million.

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In addition to the prison sentence he received today, TEEPLE, 43, of San Clemente, California, was sentenced to one year of supervised release. TEEPLE was also ordered to forfeit $553,890.00 in illegal proceeds and to pay a $100,000 fine. Restitution will be determined at a later date.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission, which has filed civil charges in a separate action.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Telemachus P. Kasulis and Sarah E. McCallum, and Special Assistant U.S. Attorney Michael P. Holland, are in charge of the prosecution.

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