New York Times, reports that Facebook has fired one of its senior employees, for insider trading after he purchased shares through a secondary market which violated the company’s policies.
The employee, Michael Brown, worked in corporate development. In a statement e-mailed by his lawyer, Edward Swanson, Mr. Brown said: “I did buy Facebook stock on the secondary market in early September 2010, and I did so with the absolute best of intentions and only because I believe in Facebook.”
TechCrunch wrote that the shares where bought just before Goldman Sachs started a $1.5 billion investment drive. In an apparent reference to that report, Mr. Brown said: “False and damaging information has been published about my actions.” He added that he had no knowledge of the Goldman Sachs deal “until it appeared in the press in January 2011.”
A law professor from the Santa Clara University, Stephen Diamond, told the N.Y.T. “If the employee had material information which he didn’t share with the seller, he could be charged with violating the law.” This news could also open a listening ear by the Securities and Exchange Commission (S.E.C.). Diamond added “This could be evidence that the control procedures in these markets aren’t sufficient.”
According to Mr. Brown’s LinkedIn profile, he had been employed at Facebook since April 2009. Before that he worked at Foundation Capital, a Silicon Valley venture investing firm.
“I am saddened by the course of events that led to my departure and the incorrect reporting of it,” Mr. Brown said. “I am now focused on moving on past this unfortunate series of events.”