Insider Trading Charges Filed Against Former Adaptec Exec

The civil case filed by the Securities and Exchange Commission revolve around Michael Ofstedahl, a former vice president at Milpitas-based Adaptec.

Ofstedahl is accused of colluding with Robert Rutner and William Kuncz to make an illegal $670,000 profit in January 1999 by capitalizing on information unavailable to the general public.

Rutner and Kuncz settled the civil cases against them by agreeing to pay $1.15 million in restitution and penalties. The case against Ofstedahl is open.

Ofstedahl also faces criminal charges under a federal grand jury indictment unsealed Wednesday. The indictment accuses him of securities fraud, obstruction of justice and perjury.

Ofstedahl denied all the charges against him and was surprised by the SEC's action, said his attorney, Bob Friese. He thought the case had been closed after responding to an SEC inquiry in June 1999, Friese said.

"He is happy that a court exists to prove his innocence," Friese said.

Rutner's attorney, William Goodman, declined comment on the SEC settlement. Kuncz's attorney couldn't be immediately reached Wednesday.

Wednesday's legal action is the latest in a string of corporate corruption cases to emerge in the Silicon Valley. The cases have generally targeted executives accused of manipulating the financial markets to cash in on the boom in high-tech stocks during the late 1990s and 2000.

In the Adaptec case, the SEC alleged Ofstedahl alerted Rutner, his dentist, that the company was about to report earnings above expectations _ a development that frequently drives up a company's stock price.

The two men had agreed to share the profits from the Adaptec stock purchased by Rutner, the SEC alleged.

Rutner subsequently passed along Ofstedahl's tip to Kuncz, who also rushed to buy stock before Adaptec's earnings announcement, the SEC alleged.

Adaptec's shares rose 27 percent the day after the company's disclosure.

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