The Securities and Exchange Commission said Tuesday that an auditor in Silicon Valley has agreed to settle insider trading charges.

The auditor, Nima Hedayati, was a former junior audit staff member at Ernst & Young. According to the SEC, in October 2015, he learned through his work as an auditor about the impending acquisition of a California semiconductor equipment maker, KLA-Tencor, by another Silicon Valley company in the chip business, Lam Research.

He allegedly bought 40 contracts for call options on KLA, both in his own trading account and that of his fiancée. He also told his mother to buy shares of KLA, and she purchased 1,400 shares of stock. When KLA and Lam issued a joint press release later that month about the deal, shares of KLA rose 19 percent, and Hedayati and his mother profited $43,000.

The Securities and Exchange Commission headquarters
Bloomberg News

“Hedayati abused his important position of trust and responsibility by illicitly trading on an audit client’s nonpublic information in a quest for an easy profit, and it wound up costing him a lot more in the end,” said Jina Choi, director of the SEC’s San Francisco Regional Office, in a statement.

Without admitting or denying the SEC’s findings, Hedayati agreed to pay $43,027.59 in disgorgement, along with $1,269.70 in interest and a $43,027.59 penalty—a total of over $87,000. He also agreed to be suspended from appearing and practicing before the SEC as an accountant. He can apply for reinstatement after five years.

Hedayati could not be reached for comment. EY spokesperson Amy Call Well emailed Accounting Today a statement from the firm saying it had brought the matter to the SEC’s attention and cooperated in the investigation.

“EY has zero tolerance for misuse of confidential client information,” said the firm. “Mr. Hedayati was immediately fired by EY upon our learning of this gross misconduct. EY brought the matter to the attention of the SEC and fully cooperated in its investigation.”

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.