A former top executive at hedge fund firm ValueAct Capital is one of seven people charged with trading on inside information in Acxiom Corp.

Ronald Yee, who had been the San Francisco-based hedge fund firm's chief financial officer until June 2008, was named in a civil suit filed by the Securities and Exchange Commission on Friday.

The SEC did not identify Yee's former employer.

ValueAct, a nine-year-old firm that invests roughly $3.5 billion in undervalued securities, said it has been cooperating with the SEC since the agency began probing Yee in 2008.

The firm, which made national headlines when its co-founder Jeffrey Ubben became the chairman of Martha Stewart Living Omnimedia Inc, put Yee on administrative leave in April 2008. In June 2008 the partners accepted Yee's request to resign.

ValueAct said it requires all employees to participate in rigorous training on how to handle non-public information and immediately told investors about the probe into Yee in 2008 and then wrote to them on Friday to detail the charges against him.

The hedge fund is not implicated in the scheme in any way and received a no-action letter from the SEC, confirming that it is not a target in the investigation, said George Hamel, ValueAct's co-founder and chief operating officer.

Yee's lawyer said he is innocent and will contest the charges.

The matter has drawn attention because it comes only two weeks after prosecutors charged prominent hedge fund firm Galleon Group's founder Raj Rajaratnam with insider trading.

At that time sources familiar with regulators' insider trading probes said there would likely be more charges, but they did not give details about specific cases.

The cases are very different however. In the Galleon matter, the fund's founder has been charged while in the Yee matter the hedge fund and its current partners have not been implicated in the scheme.

The SEC alleges that Yee, who joined ValueAct as chief financial officer in 2005, tipped off his brother-in-law, Chen Tang, who then traded on the information through personal accounts. Tang was employed at private-equity firm Friedman Fleischer & Lowe. The two men had previously founded a financial consulting firm together.

In 2007 Tang learned from Yee that ValueAct was trying to acquire Little Rock, Arkansas-based data management company Acxiom, the SEC said. Yee later found out that the deal was in jeopardy and passed the information to Tang, who then tipped his friends and family.

According to the complaint, Yee did not make any trades himself. Tang and the others used Yee's tips to trade Acxiom's securities and earned more than $6 million in illegal profits, the SEC said.

Mr. Yee denies the charges against him and intends to vigorously contest them, said Yee's lawyer, Michael Celio, a partner at Keker & Van Nest in San Francisco.

Since the $65 billion Madoff Ponzi scheme came to light last year and the average hedge fund posted its worst-ever returns by losing 19 percent in 2008, many investors have demanded more data from hedge funds to try and eliminate any whiff of potential problems.

Two analysts said ValueAct's ongoing communication with investors about the Yee case and the fact that the SEC has not implicated the firm in any way will likely calm clients' nerves and prevent them from pulling money out hastily.

ValueAct owns roughly 3.5 million shares of ThomsonReuters.

(Additional reporting by Rachelle Younglai in Washington and Matthew Lewis in Chicago; Editing by Eric Beech)

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