(HedgeCo.Net) The Securities and Exchange Commission has charged the former Chief Commercial Officer of Redwood City, Calif.-based Qualys, Inc., a cloud security and services company, with insider trading by tipping his brothers in advance of the company’s announcement of poor financial results, thus helping them avoid losses of over half a million dollars.

According to the SEC’s complaint, Amer Deeba gifted his two brothers Qualys shares in 2005. The SEC alleges that on April 7, 2015, Deeba learned that Qualys had missed its internal Q1 2015 sales forecast, which served as a basis for the revenue guidance the company provided to the market. According to the SEC, the next day, Deeba informed his two brothers about the miss and contacted his brothers’ brokerage firm to coordinate the sale of all of his brothers’ Qualys stock. When Qualys publicly announced its financial results, it reported that it had missed its previously-announced first-quarter revenue guidance and that it was revising its full-year 2015 revenue guidance downward. On the same day, Deeba sent a message to one of his brothers saying, “We announced the bad news today.” The next day, Qualys’s stock price dropped 25%. Although Deeba made no profits from his conduct, Deeba’s brothers collectively avoided losses of $581,170 by selling their Qualys stock.

After seventeen years at Qualys, Deeba resigned his position as a senior leader and officer of Qualys on August 2, 2018. Under the terms of his settlement, which is subject to court approval, he will be barred from serving as an officer or director of any SEC-reporting company for two years and he will pay a $581,170 penalty.

To settle the SEC’s charges, without admitting or denying the allegations, Deeba has also agreed to the entry of a final judgment permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.