The Securities and Exchange Commission announced on Monday it has filed insider trading charges against nine people in three different schemes which yielded a total of $6.8 million.
According to the official statement, the charges involve former chief information security officer (CISO) of Lumentum Holdings Amit Bhardwaj, Brijesh Goel, an investment banker, and former FBI trainee Seth Markin.
The SEC alleges that all of them shared confidential information with their friends who made illicit gains from that.
The three men were charged in the Federal District Court in Manhattan and each of them also faces parallel criminal charges in the Southern District of New York.
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. But as today’s actions show, we stand ready to leverage all of our expertise and tools to root out misconduct and to hold bad actors accountable no matter the industry or profession. That’s what’s required to restore investor trust and confidence.
Details on the three cases
Bhardwaj, who is former CISO of Lumentum Holdings Inc., and his friends, Dhirenkumar Patel, Srinivasa Kakkera, Abbas Saeedi, and Ramesh Chitor, using information not yet made available to the public, traded securities and generated $5.2 million in profits.
In another case, SEC revealed that Goel, an investment banker and his friend Akshay Niranjan, a foreign exchange trader at a large financial institution made over $275,000. The money was from illegally trading ahead of four acquisition announcements in 2017 using information Goel gained from his work.
In the third case, Markin, a former FBI trainee and his friend Brandon Wong, illegally traded ahead of announcement of a tender offer by Merck & Co., Inc., to acquire Pandion Therapeutics, Inc. in February 2021. The two made profits of $82,000 and $1.3 million, respectively. Markin gained the information on the acquisition from deal documents he took from his then then-romantic partner, who worked for a law firm representing Merck on the deal.
A case against a former US Representative
In a separate announcement, the regulator revealed that it has filed insider trading charges against former US Representative for Indiana’s 4th Congressional District Stephen Buyer.
The US watchdog alleges that after leaving Congress in 2011, Buyer formed a consulting firm which provided services to T-Mobile, among others. In March 2018, Buyer learned about the company’s plan to acquire Sprint ahead of announcement in a golf outing with a T-Mobile executive. Before the acquisition was made public, Buyer acquired a total of $568,000 of Sprint common stock. When the merger was announced in April that year, Buyer made $107,000 in profit.
In 2019, Buyer bought over $1 million of Navigant Consulting, Inc. securities, again ahead of the news it would be acquired by another one of Buyer’s consulting clients, Guidehouse LLP was made public. On the day that the acquisition was announced, Buyer sold nearly all of the shares and profited more than $227,000.
Grewal added:
When insiders like Buyer – an attorney, a former prosecutor, and a retired Congressman – monetize their access to material, nonpublic information, as alleged in this case, they not only violate the federal securities laws, but also undermine public trust and confidence in the fairness of our markets. We are committed to doing all we can to maintain and enhance public trust by leveling the playing field and holding Buyer accountable for illegally profiting from his access.
