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SEC charges nVidia workers
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November 20, 2001: 1:33 p.m. ET
Employees, others charged with insider trading before Microsoft pact.
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NEW YORK (CNN/ Money) - Graphics chipmaker nVidia Corp. said Tuesday it has placed 10 of its employees on leave of absence after they were accused of violating insider trading laws.
The Securities and Exchange Commission has sued 15 people, including the 10 suspended nVidia employees, accusing them of insider trading in shares of the graphics chipmaker based on advance information that it would win a lucrative contract from Microsoft Corp.
According to the SEC's suit, these 15 people made as much as $1.7 million in illegal profits after buying shares of nVidia in March 2000 on the basis of an e-mail circulated at the Santa Clara, Calif.-based company alerting staff that nVidia would supply the graphics chips for Microsoft's Xbox game console.
In a separate action, the United States Attorney's Office announced that four of these employees also have been charged with criminal violation of insider trading laws.
Nvidia (NVDA: up $0.25 to $51.59, Research, Estimates) stock edged lower Tuesday afternoon. The stock has risen more than 220 percent so far this year.
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CNNfn's Chris Huntington reports on alleged insider trading at Nvidia.
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The employees -- nine engineers and a human resources worker -- as well as a financial analyst and four friends and relatives began buying shares March 6, the SEC charged.
The stock more than doubled in price in the trading that followed, soaring to $118, the SEC said. Microsoft (MSFT: up $0.03 to $66.57, Research, Estimates) said in a news release March 10 that it had selected nVidia to design and manufacture the graphics chips for its game console.
"It is unusual to find so many employees of a single company engaged in insider trading," said Helane Morrison, chief of the SEC's San Francisco district office.
The SEC is seeking a return of the profits from the alleged insider trading, as well as civil penalties of up to three times the amount of those profits.
The SEC said it already has reached settlements with two of the defendants in the lawsuits filed in U.S. District Court.
In a brief statement issued Tuesday, nVidia said it has been cooperating with the investigations by the SEC and the US Attorney's Office for more than a year.
The company also said that neither the SEC nor the U.S. Attorney's office has indicated that any action is contemplated against the company or its key employees, directors or officers. 
-- Reuters contributed to this report
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