South Asian Man Faces Charges for Fraudulent Activity Against Ross Stores, Inc

indica News Bureau-

A South Asian man was sentenced to 30 months in prison and two years of supervised release for obtaining non-public information relating to the sales and financial performance of Ross Stores, Inc. in Pleasanton, California.

The announcement was made by the United States Attorney for the Northern District of California, David L. Anderson, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the U.S. District Judge, Haywood S. Gilliam.

According to the press release, early this year, on January 31, Saleem M. Khan pleaded guilty and charged for an insider-trading conspiracy.

On November 2, 2017, a federal grand jury returned a superseding indictment against Khan, charging him with one count of conspiracy to commit securities fraud, nine counts of securities fraud, and one count of obstruction of justice.

Khan pleaded guilty to the conspiracy and securities fraud counts.

During the plea agreement, Khan admitted that between the period of July 2009 to October 2012, he obtained a material with non-public information from a friend, relating the sales and financial performance of Ross Stores, Inc., a discount-clothing retailer then headquartered in Pleasanton, CA.

Khan’s friend worked in Ross’s finance department. Based on the material with non-public information, Khan entered into options contracts regarding Ross’s securities in advance of Ross’s monthly sales announcements. Khan used brokerage accounts held both in his name and in names of nominees. In his plea agreement, Khan admitted he compensated the Ross “tipper,” including by providing $130,000 to the tipper through third parties and by purchasing items on the tipper’s behalf. Khan also admitted he made profits in excess of $3,500,000 as a result of the scheme. At the sentencing, the government presented evidence showing that Khan had made realized gains from trading in Ross of as much as $8.2 million between October 2011 and August 2012.

Khan was sued by the Securities and Exchange Commission (SEC) pertaining to the same insider-trading scheme in the following civil case: Securities and Exchange Commission v. Saleem Khan et al., Civil Action No. 3:14-cv-02743 HSG (N.D. Cal., filed June 13, 2014). In September 2016, the court entered a final judgment in the civil case against Khan, ordering him to pay more than $15 million in disgorgement, penalties, and prejudgment interest. In that case, Khan agreed to settle the charges against him without admitting or denying the allegations in a civil complaint, and he consented to the entry of final judgment.

In addition to the prison term, Judge Gilliam sentenced the defendant to two years of supervised release. The Court scheduled a hearing on October 21, 2019, to determine whether and to what extent Khan should be ordered to pay restitution to Ross. Khan may be ordered to pay attorney’s fees incurred by Ross resulting from the company’s participation in the government’s investigation and prosecution of Khan.

The defendant will begin serving his prison term on November 4, 2019.

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