indica News Bureau-
Two Indian origin IT engineers were indicted by a federal grand jury on conspiracy to commit securities fraud while working at Silicon Valley based, Palo Alto Networks (PANW) announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett on Tuesday, December 17.
Palo Alto Networks is a cloud-computing security firm that offers customers a security operating platform.
According to the press note, Janardhan Nellore, and Sivannarayana Barama have been charged with one count of conspiracy to commit securities fraud and six counts of securities fraud. Nellore was also charged with three counts of aggravated identity theft.
According to the superseding indictment, Nellore, 42, of Santa Clara, California, and Barama, 45, of Fremont, California are alleged to have participated in an insider trading scheme in which Nellore traded on and provided Barama and others with confidential, non-public material, inside information about the financial performance of PANW, headquartered in Santa Clara, California.
According to the superseding indictment, from March 2015 through September 2018, Nellore, Barama, and his colleague, Saber Hussain, 42 of Santa Clara, California and Prasad Malempati, 50 of Cupertino, California all worked as PANW.
Their other friend, Ganapathi Kunadharaju, 41 of San Ramon, California who works as a software engineer in Santa Clara, California placed approximately 800 straddle trades of PANW securities, generating illegal profits in excess of $7 million as a result of the insider trading scheme. When making non-straddle trades of PANW securities or trading in other stocks, the conspirators lost money.
Nellore worked in PANW’s Operations and Support group, an information technology department.
Using his position at PANW, Nellore accessed and obtained nonpublic information regarding PANW’s quarterly financial performance, including PANW’s target and actual billings, bookings, revenue, and growth rate.
With that inside information, Nellore acted as both a trader and a tipper. Nellore traded PANW securities using inside information before the company disclosed its financial results to the public. In a number of “straddle trades,” Nellore placed calls and put options before earnings announcements and sold the options after the announcements.
As alleged in the superseding indictment, Nellore shared the inside information with Barama and others, who Nellore knew would trade PANW securities using the inside information he had provided. Nellore also tried to conceal this scheme to defraud by using the brokerage accounts of others.
Barama was arrested Tuesday, Dec 17, in Fremont and will make his initial appearance in federal court in San Jose Tuesday, Dec 17, before U.S. Magistrate Judge Virginia K. DeMarchi, where Barama and Nellore will be arraigned on the superseding indictment.
Nellore was previously detained as a flight risk by United States Magistrate Judge, Nathanael M. Cousins, after Nellore was arrested at the San Francisco International Airport with a ticket to leave the United States and without any apparent intention to return.
The FBI interviewed Nellore in connection with this investigation on May 7, 2019. After the interview, Nellore purchased one-way tickets to New Delhi, India, for himself and his family on an Air India flight departing the very next morning, May 8, 2019, at 11:30 a.m. FBI agents intercepted Nellore while he was trying to board the flight.
If convicted of the conspiracy to commit securities fraud charge, both Nellore and Barama face a maximum statutory sentence of 25 years in prison and a fine of $250,000.