"Stokke explained that it was Jorgenson's idea to use Stokke's accounts to conduct these illegal trades and that the proceeds from the trades were to be split evenly between the two of them," said Moran.
Stokke admitted that the profits were to be used to launch a biotech hedge fund the two wanted to operate. Stokke said he delivered $40,000 to $50,000 to Jorgenson in cash from the proceeds.
"Abusing access to Microsoft's confidential information and generating unlawful trading profits is not a wise or legal business model for starting a hedge fund," said Daniel Hawke, chief of the SEC's Market Abuse Unit, in a statement.
In its lawsuit, the SEC has demanded that the pair return their ill-gotten gains. For its part, federal criminal prosecutors said that the two face up to 20 years in prison and fines of up to $5 million.
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is firstname.lastname@example.org.
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