William J. Edwards, Acting United States Attorney for the Northern District of Ohio, today announced that an Information was filed charging Robert G. Cole with one count of Insider Trading (Securities Fraud).

Cole, age 66, resides in Oklahoma City, Oklahoma.

According to the information, Cole was a regional sales representative for Diebold, Inc., a manufacturer and seller of ATMs, bank security systems, and electronic voting terminals, located in North Canton, Ohio.

As a publicly traded company, Diebold adopted an insider-trading policy that prohibited trading in company securities by corporate employees and insiders, such as Cole, while in possession of material nonpublic information. This policy covered the purchasing of “put option” contracts tied to Diebold stock.

A “put option” contract is a security that gives the purchaser the right to sell 100 shares of the underlying stock for a specified price, which is called the “strike price,” until the expiration date of the option contract. Generally, the value of a put option contract will increase as the price of the underlying stock decreases, and will decrease as the price of the underlying stock increases. Investing in put options can be very risky. For example, if the option is held to expiration and the price of the underlying security rises above the strike price, the option will expire worthless.

The Information alleges that Cole purchased 470 Diebold put option contracts while in possession of material, nonpublic information regarding Diebold, including order and revenue shortfalls which would cause the company to miss its previously reported revenue forecasts. When this information became public, Diebold’s stock price fell sharply. Cole, having purchased the put option contracts, profited substantially from the decline in Diebold stock price.

The Information specifically alleges that between on or about September 13, 2005, and on or about September 23, 2005, on the basis of material nonpublic information regarding an anticipated earnings shortfall at Diebold, Cole purchased 470 put option contracts for a total cost of $70,110; when the information became public, Cole sold the put option contracts for a total of $579,190, obtaining illicit profits of approximately $509,080, in breach of his duty not to trade in Diebold stock while in possession of material, nonpublic information regarding Diebold. The Information seeks the criminal forfeiture of the full $509,080.

If convicted, the defendant’s sentence will be determined by
the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant U.S. Attorney Justin J. Roberts, following investigation by the Cleveland office of the Federal Bureau of Investigation and the United States Securities and Exchange Commission, Division of Enforcement in Washington, D.C.

An Information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.