The SEC sued investor Alfred Teo and 10 of his relatives, friends...

purchased 45,000 additional shares in the company prior to it announcing Best Buy’s $685 million tender offer for the chain in Dec. 2000, SEC said in a suit filed in U.S. Dist. Court, Newark. Musicland’s stock rose 30% on news of the proposed sale. Teo sought to conceal the extent of his ownership and control of Musicland stock to avoid the risk of triggering Musicland’s shareholder rights plan, the SEC said. Teo, who had confidential “communications” with Musicland senior management prior to the announcing of the deal, concealed his purchase of nearly 6 million shares of stock above the “poison pill” trigger, officials said. After the proposed sale was disclosed, Teo sold those shares, realizing a $22 million profit. Teo is alleged to have tipped off 8 associates about the proposed sale of Musicland. The associates realized a $1.1 million profit as result of the tips, the SEC said. Teo, who also was a member of the Cirrus Logic board, is alleged to have “misappropriated non- public information” about C-Cube and purchased stock shortly before its $865 million sale to LSI Logic in 2001. At the time, Cirrus also was weighing a bid for C-Cube, but later acquired Stream Machine, which developed A/V codecs. Teo served on the Cirrus board from July 1998-April 2001. Teo purchased 35,000 shares of C-Cube stock prior to the proposed sale and realized a $180,012 profit by selling the shares after it was announced, the SEC said. Three of the defendants in the cases -- Charles Fortune, Jerrold Johnston and Lawrence Rosen, founder of online CD retailer N2K -- reached agreement with the SEC under which they returned their profits to the SEC and paid a civil penalty. The other defendants include Teo’s sister-in-law Teren Seto Handelman; John Reier, the CFO of Alpha Industries, a company controlled by Teo; Mark Lauzon, who sold raw plastic to Teo’s companies; Philip Sacks and his son, Mitchell; David Ross and Richard Herron.