“If ordinary investors think the market is being rigged at their expense in favor of insiders abusing their positions, they won’t invest their hard-earned money in the markets.”
The Securities and Exchange Commission has charged nine people with insider trading for three separate alleged schemes that together yielded more than $6.8 million in ill-gotten gains.
Those charged include a former Chief Information Security Officer (CISO), an investment banker and a former FBI intern, all of whom allegedly shared confidential information with their friends, who then exchanged this confidential information.
All three enforcement actions were taken by the Analysis and Detection Center of the Market Abuse Unit (MAU) of the SEC’s Enforcement Division. The SEC unit uses data analysis tools to detect suspicious trading patterns.
Gurbir S. Grewal, Director of the SEC’s Enforcement Division, said: “If ordinary investors think the market is being rigged at their expense in favor of insiders abusing their positions, they don’t invest their hard-earned money in the markets. But as today’s actions show, we’re ready to leverage all of our expertise and tools to root out wrongdoing and hold bad actors accountable, regardless of industry or profession. This is what is needed to restore investor confidence.
The nine defendants in the three cases were charged with violating the anti-fraud provisions of securities laws. The SEC is seeking a permanent injunction, reimbursement with prejudgment interest and civil penalties.
Amit Bhardwaj, former Chief Information Security Officer of Lumentum allegedly helped his friends, Dhirenkumar Patel, Srinivasa Kakkera, Abbas Saeedi and Ramesh Chitor negotiate ahead of two corporate acquisition announcements by Lumentum, generating more than $5.2 million in illicit profits.
Through his work at Lumentum, he became aware of the company’s plans to first acquire Coherent, Inc. and later to acquire NeoPhotonics Corporation. He then allegedly purchased the respective titles ahead of the announcements and shared the information with his friends.
Former investment banker Brijesh Goel and his friend Akshay Niranjanwho was a forex trader at a major financial institution, earned more than $275,000 from illegal trades before four acquisition announcements in 2017.
Brijesh Goel learned of the existence of the four acquisitions through his employment. The complaint further alleges that Niranjan purchased call options on the target companies and then wired Goel $85,000 for Goel’s share of the proceeds.
Seth Markin, former FBI intern was also accused by the same SEC unit of associating with his friend Brandon Wong in an insider trading scheme. They earned approximately $82,000 and $1.3 million, respectively, from illegal trading before the February 2021 announcement of a tender offer by Merck & Co., Inc., to acquire Pandion Therapeutics , Inc.
Seth Markin secretly reviewed the binder of deal documents for the planned takeover bid of his then-romantic partner, who worked as an associate for a law firm representing Merck on the deal, shared the information and tipped his close friend Wong. Wong bought a Rolex watch from Markin to thank him for the tip, according to the investigation.