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InfoSpace founder to pay $247m

SAN FRANCISCO -- InfoSpace Inc. founder Naveen Jain was ordered to pay $247.1 million for insider stock trades he made while running the Internet company.

US District Court Judge Marsha J. Pechman said Jain and his wife Anuradha should pay $202.6 million in profits from the trading and $44.6 million in interest to Bellevue, Wash.,- based InfoSpace, according to an order signed Friday in Seattle.

Shares of InfoSpace rose 19 percent in May after Pechman ruled Jain improperly transferred 2.5 million shares from InfoSpace trusts to his personal brokerage account and used another one million shares to pay off loans to InfoSpace. Jain made more than $207 million from the transactions, said lawyers for a shareholder who sued.

"The interesting thing about this case is that the company gets the first crack" at the money, said Rick Spoonemore, a lawyer who represented InfoSpace shareholder Tom Dreiling. "It's great news for the company."

Jain will issue a statement later, said Robert Silverman, a spokesman for Jain. InfoSpace fired Jain as chairman and chief executive in December.

The award is the largest ever for "swing-trade" insider selling, Spoonemore's firm, Sirianni, Youtz, Meier & Spoonemore, said in a statement. Swing trades are when insiders buy and sell company stocks within a six-month period.

Adam Whinston, an InfoSpace spokesman, said the company is monitoring the case.

"We're a bystander," said Whinston. "The judgment could be appealed."

Dreiling sued Jain after the company declined to file a lawsuit against him, said Spoonemore. Under a section of federal securities law, shareholders can sue on behalf of the company to remedy prohibited insider trading. Any profits from insider trading violations go to the company, under the law.

InfoSpace shares fell 31 cents Friday to $14.99 on the Nasdaq Stock Market.

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