Two California Residents Convicted In $819,000 Insider Trading Scheme

SAN FRANCISCO – Today, Christian Keller and John Gray each pleaded guilty to one count of conspiracy and one count of securities fraud, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.  The guilty pleas stem from an insider trading scheme involving material, non-public, inside information from Rovi Corporation, and one other publicly-traded company, that generated illegal profits in excess of $819,000.

Keller, 41, of Los Altos, and Gray, 39, of Irvine, were charged by information filed September 2, 2015, with participating in an insider trading scheme.  According to the information, Keller provided Gray with material, non-public, inside information between 2009 and 2012.  Prior to 2012, Keller worked at a public company, the name of which was not disclosed in the information, where Keller had access to material, non-public, confidential information, which Keller provided to Gray and which Gray used to execute securities transactions. 

In early 2012, Keller was employed by Rovi Corporation, in Santa Clara, Calif., as a Vice President of Corporate Finance and Investor Relations.  Keller provided Gray with material, non-public, confidential information relating to the performance and revenue estimates of Rovi Corporation.  Gray, and others, then executed a series of securities transactions using the inside information, sometimes in the brokerage accounts of third persons to conceal the scheme.  From the illegal trading profits, Gray paid Keller a total of approximately $46,000 in cash.  Each defendant was changed with one count of conspiracy, in violation of 18 U.S.C. § 371, one count of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and related regulations, and aiding and abetting securities fraud, in violation of 18 U.S.C. § 2. 

Both defendants currently are released from custody pending sentencing.  Keller is scheduled to appear for sentencing on April 19, 2015, before the Honorable Jeffrey S. White, District Judge.  Gray’s sentencing, also before Judge White, is scheduled for April 5, 2015. 

The maximum statutory penalty for conspiracy in violation of 18 U.S.C. § 371 is 5 years in prison and a fine of not more than $250,000, or twice the gross gain or twice the gross loss, whichever is greater.  The maximum statutory penalty for securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff is 20 years in prison and a fine of not more than $5 million.  However, any sentence following convictions for these offenses would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorney Adam A. Reeves is prosecuting the case with the assistance of Beth Margen and Bridget Kilkenny.  The prosecution is the result of an investigation by the FBI.