Opinion ID: 745324
Heading Depth: 2
Heading Rank: 3

Heading: Teradata4

Text: 11 Following its merger with NCR, AT & T discovered that NCR was party to a joint development agreement with Teradata that provided that the agreement would be invalidated in the event of a change of control of NCR. Accordingly, in order to gain exclusive rights to certain valuable technology possessed by Teradata, in October 1991, AT & T's Board of Directors authorized its Chairman and the President of NCR to begin discussions with Teradata about the possibility of acquiring Teradata. On November 27, 1991, the AT & T Board authorized the acquisition. 12 In mid-November 1991, Sweeney called Alger and told him that he had read a Dow Jones report stating that NCR had extended a contract with Teradata for thirty days, and that Alger should ask Brumfield if he knew anything about it. Alger did so, and on November 26 Brumfield called Alger, asked him to come down to his office, and told him that AT & T was going to acquire Teradata that weekend. Brumfield told Alger that this information was not for publication and to really ... keep it quiet. Alger concluded that Brumfield had obtained the information based on his position with AT & T. Alger and Brumfield called Sweeney and asked him for price and volume information on Teradata. Sweeney informed them that Teradata was thinly traded and that they should trade lightly in it or risk investigation by the SEC. Brumfield asked Alger to buy Teradata options for him through Alger's contacts, and Alger called Brody, O'Brien, and Friedman to arrange it. During his conversation with Sweeney in Brumfield's office, Alger told Sweeney not to tell Flanagan about the acquisition, but to have Flanagan call Alger so that Alger could emphasize to Flanagan the importance of trading lightly. Alger testified that Flanagan called him later that day, that the two arranged to meet at a hotel lobby the following day, and that at that meeting he told Flanagan about the tip from Brumfield and asked him to trade for Brumfield. 13 On November 27, Brody, O'Brien, and Friedman purchased Teradata call options. Telephone records produced by the government show that a thirty minute telephone conversation between Flanagan and Warren Smith took place the following day, November 28. The next morning, Smith invested more than $87,000 in Teradata call options. 14 On December 2, AT & T publicly announced that NCR had agreed to acquire Teradata for approximately $500 million. By the end of that day's trading, the price of Teradata common stock had risen over $5 per share. Within a few days, Smith sold the Teradata call options he had purchased, generating profits of approximately $80,000. Alger testified that the trades Flanagan had placed for Brumfield at Alger's request generated a profit of approximately $1,100.