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The SEC claims that these individuals, who are all California residents, engaged in illegal trading ahead of two Lumentum announcements of company acquisitions and made over $5.2 million in gains. In another case, the SEC accuses investment banker Brijesh Goel, 37, and his buddy Akshay Niranjan, 33, both of New York, of engaging in insider trading while working as foreign exchange traders for a major financial institution.
According to the SEC, two good friends from business school who traded illegally ahead of four acquisition announcements in 2017 that Goel learnt about through his job are accused of making more than $275,000. According to the lawsuit, Niranjan allegedly bought call options on the target companies and afterwards sent $85,000 to Goel for his cut of the profits.
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The US Attorney's Office for the Southern District of New York on Monday announced simultaneous criminal charges in each of the SEC's enforcement cases, which were filed in federal district court in Manhattan.
"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.
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"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.
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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 concurred and sent instructions to two people he knew with accounts in India to send the relative Indian rupees worth tens of thousands of US dollars. To make up for the important, non-public information Bhardwaj had given Chitor concerning the NeoPhotonics Announcement, Chitor had the rupees transferred to the relative.
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, are the relief defendants. In addition to the relief outlined above, the SEC's complaint seeks disgorgement of illicit profits with prejudgment interest
(With PTI inputs)
