Regulators and Prosecutors Raise Charges for Insider Trading

The US Attorney’s Office in San Francisco charged a group of 6 people Tuesday with trading on inside information to earn a combined $1.7 million, Wall Street Journal reported.

Infinera Quarterly Earnings Tips

Authorities charged 3 of the men in federal criminal court for their involvement in the sharing of unlawful stock tips that allowed them to take advantage of the markets and earn substantial amounts.

The insider trading started from Nathaniel A. Brown, a former senior revenue manager at Infinera Corp, who used undisclosed quarterly results of the computer-networking company from April 2016 throughout November 2017 to tip one of his friends, Benjamin Wylam.

According to the Securities and Exchange Commission (SEC) which uncovered the scheme, the insider trading saw Wylam, a 42-year-old biology teacher in Santa Clara, California and a bookmaker on the side, earn more than $1 million in illicit profit. SEC filed separately against the 6 defendants civil fraud charges.

US prosecutors want Wylam to pay back $999,000 of the insider trading profit he made while trading on the information provided to him by his friend Brown.

SEC submitted to the court a declaration signed by Wylam in which he agreed to plead guilty to charges with criminal security fraud and to resolve SEC’s civil allegations, including to pay a fine the amount of which will be determined by the court later.

The other 4 defendants are Naveen Sood, who received the illegal stock tips from Benjamin Wylam, who he owed more than $100,000 in gambling debt, SEC revealed. On his behalf, Sood passed the insider information to 3 other people, Naresh Ramaiya, Marcus Bannon and Matthew Rauch, and all of them used the stock tips to execute trades on Infinera.

“Using sophisticated data analysis, the SEC was able to uncover this insider trading ring and hold each of its participants accountable to ensure the integrity of our markets.”

Joseph Sansone, Chief, Market Abuse Unit, Enforcement Division, SEC

Fortinet Negative Trading Update

The insider trading expanded into another company based in Sunnyvale, Fortinet Inc., as one of the defendants who worked for the cyber-security firm got hold of an information that the company was planning “to make an unexpected, preliminary earnings announcement” to surprise markets on  the downside.

Trading on the information, the Fortinet employee and three other men who he shared the info with managed to make a total of $270,000, SEC investigation revealed. The securities regulator noted that, out of the 6 it charged with civil fraud, 4 including Brown agreed to pay civil penalties from $65,780 to $281,497.