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A former Microsoft finance manager and his day-trading friend appeared in federal court Thursday in Seattle on charges they used insider information to raise seed money for a hedge fund.

Brian Jorgenson, 32, and Sean Stokke, 28, were charged in a complaint with 35 counts each of insider trading, alleging they made nearly $400,000 in three market transactions that were based on secret financial information Jorgenson was privy to as a senior manager at Microsoft’s Finances Group.

Jorgenson made $130,000 a year at Microsoft before he was fired.

Both men waived their right to a preliminary hearing, and U.S. Magistrate Judge Mary Alice Theiler released them on their own recognizance and told them to stay away from one another.

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Meantime, the Securities and Exchange Commission (SEC) filed a lawsuit against the men in federal court, seeking to seize any illegal profits.

Jorgenson admitted to the crimes in an interview with The Seattle Times on Tuesday, although he did not identify his friend, who is described by prosecutors as a “day trader” who had previously worked with Jorgenson at a Seattle asset-management group.

Stokke appeared in court with public defender Jennifer Horowitz, who was appointed to represent him after he told the judge the stock funds listed on a financial-disclosure sheet had been seized by the government.

Stokke declined to comment after the hearing.

Jorgenson, who lives in Lynnwood with his wife and four children, had worked at Microsoft for three years. He was fired after his link to the trades was discovered.

A Microsoft spokeswoman said the company has no tolerance for insider trading and that it cooperated with federal agents and prosecutors.

The charges allege Jorgenson provided Stokke with information about three financially significant events over the past 18 months — the company’s $300 million investment in Barnes & Noble and the Nook e-reader in April 2012; Microsoft’s failure to meet earnings estimates in the first quarter of fiscal year 2013; and the increased earnings estimate in the first quarter of fiscal 2014.

In each instance, Stokke made trades or invested in financial instruments that profited from the information, according to the charges. Prosecutors allege they made $392,000.

In the interview with The Times, Jorgenson said the amount was closer to $200,000, but that he did not have direct access to the accounts.

Jorgenson said he was paid $40,000 for the inside information.

The complaint alleges the men tried to cover their tracks by using throwaway “burn phones” and taking some of the money in cash.

The federal charges allege Jorgenson and Stokke planned to use the money to start a hedge fund they intended to call “BioHawks Investment Group.”

Neither the complaint nor the SEC lawsuit details how the men were caught.

Assistant U.S. Attorney Katheryn Kim Frierson said she would not discuss “tactics,” but added that it is “well known that we monitor transactions” around corporate public statements and financial announcements.

Jorgenson, who describes himself as a Christian, said he went public after being caught in hopes that others might learn from his mistake.

Mike Carter: 206-464-3706 or Twitter: @stimesmcarter.

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