Several Indian-origin persons charged in insider trading cases in US

Several Indian-origin persons have been charged in the US with insider trading in two separate alleged schemes in which they made more than five million dollars in illegal profits.

Amit Bhardwaj, 49, the former chief information security officer of Lumentum Holdings and his friends Dhirenkumar Patel, 50, Srinivasa Kakkera, 47, Abbas Saeedi, 47, and Ramesh Chitor, 45, have been charged by the Securities and Exchange Commission on Monday.

The SEC alleges that these persons, all residing in California, traded ahead of two corporate acquisition announcements by Lumentum and generated more than USD 5.2 million in illicit profits.

In another action, the SEC alleges insider trading by investment banker Brijesh Goel, 37 and his friend Akshay Niranjan, 33, both of New York, who was a foreign exchange trader at a large financial institution.

The SEC alleges that the two men, close friends from business school, made more than USD 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 USD 85,000 for Goel's share of the proceeds.

The SEC's enforcement actions were filed in federal district court in Manhattan, and in each case, the US Attorney's Office for the Southern District of New York on Monday announced parallel criminal charges.

"If everyday investors think that the market is rigged at their expense in favour of insiders who abuse their positions, they are not going to invest their hard-earned money in the markets," said Gurbir S Grewal, Director of the SEC's Enforcement Division.

"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."

The SEC's complaints charge these defendants with violating the antifraud provisions of the securities laws and seek permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties. In the two cases, the SEC's investigation is ongoing.

In the case involving Bhardwaj, the SEC's complaint alleges that, through his work at Lumentum, Bhardwaj learned material nonpublic information about the company's plans to first acquire Coherent and later acquire NeoPhotonics Corporation.

Based on this 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 some of his ill-gotten gains.

The SEC further alleges that, during October 2021, Bhardwaj shared the information 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 instructed by Bhardwaj.

The SEC's complaint alleges that following the NeoPhotonics announcement, in late 2021, Bhardwaj asked Chitor to send money to a relative of Bhardwaj who lived in India.

Chitor agreed and directed two individuals he knew who had accounts in India to send to the relative Indian rupees in the amount equivalent to tens of thousands of US dollars. Chitor had the rupees transferred to the relative to compensate Bhardwaj for the material nonpublic information Bhardwaj had provided to Chitor about the NeoPhotonics Announcement.

In addition to the relief described above, the SEC's complaint seeks disgorgement of illicit profits with prejudgment interest from relief defendants Gauri Salwan, 45, who is Bhardwaj's wife, the Kakkera Family Trust which is a personal and testamentary trust governed by the state of California and Kakkera and his wife are the trustees, Janya Saeedi, 54, who is the wife of Saeedi and All US Tacos Inc, whose sole directors are Saeedi and Janya Saeedi.