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Recently, the Securities and Exchange Commission (SEC) charged a senior Microsoft Corp. (MSFT - Free Report) employee of insider-trading. The executive, Brian Jorgenson and his business partner Sean Stokke have been accused of utilizing confidential information regarding Microsoft’s investment in bookseller Barnes & Noble (BKS - Free Report) .

Insider-trading is considered to be an offense in the U.S. and carries a penalty of up to 20 years of imprisonment and a fine of up to USD 5.0 million. Jorgenson and Stokke are charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, both directly and pursuant to 20(d) of the Exchange Act.

According to U.S. officials, Jorgenson divulged the information that Microsoft intended to invest $300 million in Barnes & Noble`s e-reader business to his friend Stokke ahead of an important public announcement. Soon after the public announcement was made, the stock price of Barnes & Noble jumped 51% on the same day, which, in turn, yielded gains of $185,000 for the duo.

We note that in Jul 2013, they had collaborated to buy options in Microsoft ahead of the company`s earnings announcement.

As per reports, Jorgenson worked in Microsoft as an analyst and his work required him to prepare analytical reports regarding subjects such as the market response to Microsoft’s earnings. Reportedly, Jorgenson passed on the information to Stokke who purchased options and ended up making illicit profits of around $195,000.

Jorgenson’s association with Stokke goes back to the time when they worked as colleagues in an asset management company.

Microsoft Corporation develops, manufactures, licenses, sells and supports software products. The company operates in five segments: Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division. Microsoft reported revenues of $18.53 billion in fiscal first quarter of 2014.

Currently, Microsoft has a Zacks Rank #3 (Hold). Better-ranked stocks in the technology sector include Interactive Intelligence Group and Microstrategy Inc. (MSTR - Free Report) , both with a Zacks Rank #1 (Strong Buy).

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