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The Securities and Exchange Commission (SEC) filed insider trading charges against nine individuals, including several Indian Americans, in three separate alleged schemes that together yielded more than $6.8 million in ill-gotten gains.
The SEC’s complaints charge all nine defendants with violating the antifraud provisions of the securities laws and seek permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties. The investigation is ongoing.
According to the SEC’s charges, Amit Bhardwaj, the former chief information security officer of Lumentum Holdings Inc, and his friends, Dhirenkumar Patel, Srinivasa Kakkera, Abbas Saeedi, and Ramesh Chitor, traded ahead of two corporate acquisition announcements by Lumentum, generating more than $5.2 million in illicit profits.
The SEC’s complaint alleges that, through his work at Lumentum, Bhardwaj learned material nonpublic information (MNPI) about the company’s plans to first acquire Coherent, Inc. and later acquire NeoPhotonics Corporation. Based on this insider information, Bhardwaj allegedly purchased Coherent securities ahead of the January 2021 announcement of Lumentum’s agreement to acquire Coherent and tipped his friend Patel, with the understanding that Patel would later share his profits.
In October 2021, SEC documents show, Bhardwaj shared MNPI about Lumentum’s planned acquisition of NeoPhotonics with his friends Kakkera, Saeedi, and Chitor, who then amassed large positions of NeoPhotonics based on Bhardwaj’s tips.
After the November 2021 announcement of the NeoPhotonics acquisition, Chitor indirectly transferred funds to Bhardwaj’s relative in India as part of the deal.
The SEC’s enforcement actions were filed in federal district court in Manhattan, and in each case the U.S. Attorney’s Office for the Southern District of New York today announced parallel criminal charges.
Gurbir S. Grewal, Director of the SEC’s Enforcement Division, said, “If everyday investors think that the market is rigged at their expense in favor of insiders who abuse their positions, they are not going to invest their hard earned money in the markets.”
In a second insider trading case, investment banker Brijesh Goel and his friend Akshay Niranjan, a foreign exchange trader at a large financial institution – both close friends from business school – allegedly made more than $275,000 from illegally trading ahead of four acquisition announcements in 2017 that Goel learned about through his employment. The complaint further alleges Niranjan purchased call options on the target companies and later wired Goel $85,000 for Goel’s share of the proceeds.
In the third case, Seth Markin, a former FBI trainee, and his friend Brandon Wong allegedly made approximately $82,000 and $1.3 million respectively, from illegally trading ahead of the February 2021 announcement of a tender offer by Merck & Co., Inc., to acquire Pandion Therapeutics, Inc.
The SEC’s complaint alleges that Markin secretly reviewed the binder of deal documents about the planned tender offer from his then-romantic partner, who worked as an associate for a law firm representing Merck on the deal, traded on the MNPI, and tipped his close friend Wong. The complaint alleges that, after the announcement, Wong bought Markin a Rolex watch to thank him for the tip.
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