Regulators have sued a former Diebold Inc. sales employee, claiming he traded illegally on inside knowledge that the North Canton, Ohio, automated teller machine maker would miss financial targets in 2005.
Robert Cole, 66, made more than $500,000 by betting Diebold's shares would drop after a manager told him revenue and orders were falling short for its North American ATM business, the Securities and Exchange Commission said in a suit filed last week in the U.S. District Court for the Western District of Oklahoma in Oklahoma City.
"Just like any other corporate insider, Mr. Cole had a duty to keep the information he was given by the company confidential and not use it for his personal benefit,'' said Scott Friestad, the SEC lawyer overseeing its case.
Mr. Cole, who had worked at Diebold for 22 years, is accused of buying hundreds of soon-to-expire stock options in September 2005, less than a week before the company cut its profit forecast and said it would seek to rectify "unacceptable" financial performance. The day the forecast was cut the shares plunged 16%, the most in seven years.
In the suit, the SEC said Mr. Cole paid $70,100 for put contracts and sold them for about $509,100 after the announcement. At the time he was working independently as a sales representative and had signed a confidentiality agreement, according to the agency.
Joseph Bocock, an attorney for Mr. Cole and a shareholder at McAfee & Taft in Oklahoma City, did not return phone calls.
