The U.S. Securities and Exchange Commission (SEC) announced insider trading charges against Andreas "Andy" Bechtolsheim, the co-founder and chief architect of Silicon Valley technology company Arista Networks, Inc. Bechtolsheim has agreed to pay nearly $1 million in civil penalties.

According to the charges, Bechtolsheim misappropriated information regarding the impending acquisition of high-speed optical interconnect product manufacturer Acacia Communications, Inc.

The SEC alleges that Bechtolsheim, who was then chairman of Arista Networks, learned of Acacia's impending acquisition through his and Arista Networks' longstanding relationship with another multinational technology company on July 8, 2019. This company was also considering acquiring Acacia and consulted Bechtolsheim about the potential acquisition. Allegedly, Bechtolsheim immediately traded Acacia options in the accounts of a close relative and a colleague upon learning this information.

The following day, on July 9, 2019, before the market opened, Acacia and Cisco announced that Cisco had agreed to acquire Acacia for $70 per share. Acacia's stock price surged by 35.1% that day. According to the charges, Bechtolsheim's trades resulted in illegal profits of $415,726 in the accounts of his relatives and colleague.

Bechtolsheim neither admitted nor denied the charges brought by the SEC in the Northern District of California. He agreed to a settlement, subject to court approval, which includes a five-year bar from serving as an executive or director of a public company and the payment of $923,740 in civil penalties.