Pleasanton, Fremont men sentenced to prison over insider trading of tech stocks among friends

Pleasanton, Fremont men sentenced to prison over insider trading of tech stocks among friends

technology By Jan 04, 2024 No Comments

Pleasanton and Fremont Men Sentenced to Prison for Insider Trading

Two Bay Area men have been sentenced to federal prison for their involvement in an insider-trading scheme related to the stock of a San Jose technology firm. Srinivasa Kakkera of Pleasanton and Abbas Saeedi of Fremont were part of a group of friends who engaged in illegal trading based on non-public information obtained from the former chief information Security officer at Lumentum.

Illegal Trading Scheme

The U.S. Department of Justice revealed that Kakkera, a former head of engineering and Artificial Intelligence at Adobe, received a 1.5-year prison sentence, while Saeedi, the owner of a Newark tax preparation business, was sentenced to five months in prison. The friends utilized their privileged information to generate substantial illegal profits in the stock market.

The Justice Department disclosed that the insider-trading scheme involved privileged information about Lumentum’s potential acquisition of other companies. Bhardwaj, the former chief information security officer, obtained information about Lumentum’s confidential Business activities and shared it with his associates, including Kakkera and Saeedi. This resulted in illegal trading of securities in companies such as Coherent and NeoPhotonics.

Implications and Legal Proceedings

After Lumentum’s public announcement of its intention to acquire Coherent, the stock price surged by 29%, leading to significant profits for the individuals involved in the scheme. The SEC charged several individuals, including Kakkera, Saeedi, and Bhardwaj, with fraud and conspiracy to obstruct justice. Patel, one of the associates, pleaded guilty to fraud charges and is awaiting sentencing in federal court.

The illicit activities extended beyond the trading itself, as the group sought to conceal their illegal actions and obstruct the FBI investigation. They held meetings to fabricate false stories and documents to cover up their insider-trading activities. In response to federal subpoenas and questioning, they engaged in fraudulent behavior to impede the investigation, including lying to the FBI and creating fake documents.

Legal Ramifications and Sentencing

Kakkera and Saeedi initially pleaded not guilty to charges of securities fraud, wire fraud, and conspiracy to obstruct justice. However, they eventually pleaded guilty to the latter charge. The court ordered them to forfeit their illicit gains to the government as part of their sentencing. The SEC also imposed additional penalties on the individuals involved, including bans on specific Business activities and fines.

Lessons and Consequences

The case of insider trading among friends highlights the serious legal repercussions of engaging in unlawful activities in the financial markets. Beyond the immediate prison sentences, the individuals involved face additional regulatory and financial penalties. The case serves as a reminder of the severe consequences that can arise from deceptive and illegal behavior in the realm of securities trading.

Conclusion

The sentencing of Kakkera and Saeedi underscores the commitment of law enforcement and regulatory agencies to combat insider trading and maintain the integrity of financial markets. The legal actions against the individuals involved in this scheme send a clear message regarding the severity of insider trading and the efforts to hold those responsible accountable for their actions.

Source: mercurynews

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