SEC charges former Qualys executive with insider trading

The Securities and Exchange Commission has charged the former chief commercial officer of Redwood City-based Qualys Inc. with insider trading.

The SEC alleges Amer Deeba helped his brothers avoid losing over half a million dollars by tipping them prior to the firm's announcement of a missed sales forecast.

Deeba worked at Qualys, a cloud-based security and compliance solutions provider, for 17 years and ran the firm's marketing division and assisted with the preparation of Qualys' quarterly earnings releases.

In 2005, Deeba gifted his brothers stock in the company, according to the complaint, and in 2012 Qualys went public, after which Deeba allegedly made arrangements for a brokerage firm to open accounts for his brothers for their shares of the company.

While visiting family in Lebanon in April 2015, Deeba learned during a phone call with Qualys' CEO that the company had missed its internal first quarter 2015 sales forecast, the SEC complaint states. Deeba allegedly tipped his brothers about the sales miss and contacted the brokerage firm to sell all of his brothers' Qualys stock.

When Qualys announced its financial results publicly, it had missed previously announced first-quarter revenue guidance and would revise its full-year 2015 revenue guidance downward, according to the SEC. The following day, Qualys saw its stock drop 25 percent and Deeba's brothers avoided losses totaling $581,170, the complaint states. Securities and Exchange Commission v. Deeba, 3:18-cv-05346 (N.D. Cal., filed Aug. 30, 2018).

"Deeba violated his obligations to Qualys by tipping his brothers about the company's poor sales while other shareholders remained in the dark," Jina Choi, director of the SEC's San Francisco Regional Office, said in a statement.

"It strikes me as remarkable that the SEC did not allege that the CEO actually communicated the material nonpublic information to Deeba," said Nicolas Morgan, a partner at Paul Hastings LLP in Los Angeles. "The takeaway is that many SEC insider trading cases are based on largely circumstantial evidence."

Qualys could not be reached for comment Thursday. Deeba resigned from Qualys Aug. 2.