Articles Posted in Insider Trading

Avaneesh Krishnamoorthy, an ex-risk manager for Nomura Holdings Inc. in the USA, has been sentenced to three months in prison. Krishnamoorthy pleaded guilty earlier this year to securities fraud related to allegations that he traded on information about Golden Gate Capital LP’s plans to buy NeuStar Inc. He made $48K in the process.

The ex-Nomura risk manager, who was a firm vice president, purchased hundreds of NeuStar shares using an undisclosed brokerage account belonging to his wife. He did this after reading an internal confidential email about the planned purchase. Nomura helped finance the deal.

In September, the US Securities and Exchange Commission announced that a final judgment had been reached in its civil case against Krishnamoorthy. Under the terms of the judgment, the ex-Nomura holdings manager is permanently enjoined from violating sections of the Securities Exchange Act of 1934, rule 10b-5 thereunder, and the Securities Act of 1933. He also is liable for almost $79K of disgorgement that would be considered fulfilled either by submission of a forfeiture order in the criminal case against him or proof of payment. Additionally, the former Nomura VP was ordered to pay more than $1200K in interest and serve permanent bars from involvement in penny stock offerings and the securities industry.

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Ex-Amazon Employee and Former College Schoolmate Accused of Insider Trading
The US Securities and Exchange Commission has brought civil insider trading charges against Brett Kennedy and Maziar Rezakhani. Kennedy, an ex- Amazon financial analyst, is accused of leaking confidential information to Rezakhani, who was a former fraternity brother, prior to a company earnings announcement for Amazon being disclosed to the public. Kennedy is also facing criminal charges.

According to the regulator, Kennedy shared the 2015 first quarter earnings information without authorization while employed at Amazon. Rezakhani then allegedly illegally traded on the information in advance of the information’s release to the public and he made over $116K in illicit profits.

Also, on two online communications platforms involving trading, Rezakhani accurately predicted Amazon’s first quarter performance. He is accused of paying Kennedy $10K for the tip and sharing the money with Sam Sadeghi, who gave him trading advice. Sadeghi also faces civil charges.

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Michael Siva, a former Morgan Stanley broker (MS), has pleaded not guilty to criminal charges accusing him of insider trading. Siva is one of several people charged over their alleged participation in a group of “tipping chains” and trading on tips about upcoming acquisitions and mergers. The information were provided by Bank of America (BAC) consultant Daniel Rivas. Siva is said to have gotten the tips from the James Moodhe, who is the father of Rivas’ girlfriend.

Rivas and Moodhe have both pleaded guilty to the criminal charges accusing them of insider trading. They are cooperating with the government’s probe.

Moodhe is said to have shared Rivas’s tips with Siva from at least 2015 up through earlier this year. Siva allegedly used the information so he could make successful trades for clients as well as for himself. Moodhe and Siva allegedly met at eating places outside NYC during which time the former would read details about upcoming deals to Siva, including the value of the deals and when news about them was expected to go public. The two men allegedly made over $3M trading prior to and after the announcement of the deals.
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The US Securities and Exchange Commission has brought insider trading charges against seven people who made millions of dollars while insider trading on dozens of upcoming acquisitions and mergers involving 30 corporate deals. The regulator’s complaint contends that Daniel Rivas, who used to be a bank IT employee, misused the access he had to a computer system by tipping four people with information that they then used to trade. Some of the those whom Rivas tipped allegedly also tipped other people, who tipped others, too.

InvestmentNews identified the bank that Rivas worked for at the time of the misconduct as Bank of America (BAC). (Bank of America Merrill Lynch later fired Rivas, who was then hired by RBC Capital Markets. In the wake of the insider trading allegations against him, Rivas was suspended by RBC.)

Rivas often tipped James Moodhe, who is the father of his girlfriend, using handwritten notes. Moodhe made approximately $2M from trading on the tips and shared the information with financial adviser Michael Siva, whom InvestmentNews identifies as a former Morgan Stanley (MS) broker.

Citigroup to Pay Plaintiffs Suing Over Libor Rigging

Citigroup Inc. (C) will resolve a private US antitrust lawsuit alleging Libor manipulation by paying plaintiffs $130M. The litigation was brought by “over-the-counter” investors who engaged in direct transactions with banks that belonged to the panel that determines London Interbank Offered Rate.

As part of the proposed preliminary settlement, the bank will pay the money to a fund for future class members. It also will cooperate with the lawsuits brought against other banks also accused of involvement in Libor rigging. Despite settling the case, however, Citigroup is not admitting or denying any wrongdoing.

Lawyer Barred Over Fraud Allegations
The US Securities and Exchange Commission has barred David Lubin, a New York-based lawyer, from practicing or appearing before the regulator and acting as any company’s director or officer. The regulator is accusing him of making misleading and false statements in corporate filings and committing fraud while he was the attorney and director of Entertainment Art. He was also the public company’s biggest shareholder.

According to the SEC’s securities order, not only did Lubin draft and sign misleading public filings, but also, he concealed their “true ownership” as well as that the fact that a significant chunk of the shares were of a “restricted nature.”

As a result, after Entertainment Art’s name was changed to Biozoom, over 14 million shares were resold illegally in an unregistered distribution, rendering $34M of illicit profits. At the time, the shares had belonged to a shell investor.

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Ex-SAC Capital Advisors LP Portfolio manager Mathew Martoma is asking for another trial. Martoma is serving nine years behind bars after he was convicted for insider trading in Wyeth LLC and Elan Corp. stock based on illegal tips and making $275M in the process. He believes his conviction should be overturned because of a ruling issued by the US Supreme Court last year.

The Supreme Court case involved a man accused of engaging in insider trading after his brother-in-law, a former Citigroup (C) investment banker, gave him the illegal tip. The nation’s highest court upheld the conviction against Bassam Salman in a unanimous ruling. The justices said that a person could be convicted for sharing insider tips with a friend or relative regardless of whether or not there was a profit for the tipper.

Martoma is accused of obtaining confidential information from two physicians involved in clinical trials for an Alzheimer’s drug. His defense attorney is contending that the prosecution did not bring enough evidence to demonstrate that the person who tipped Martoma shared the information because he was paid money. The lawyer also claims that instructions the jurors received were flawed because they allowed for a conviction on the grounds of the promise that the tipper was motivated by the possibility of friendship instead of because of a preexisting personal connection. Prosecutors are arguing that the financial relationship between Martoma and one of the physicians, who testified that he was paid $1K/hour for consulting with Martoma, was sufficient to support the earlier conviction.

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In a Securities and Exchange Commission case linked to parallel criminal charges, the regulator has filed insider trading charges against Avaneesh Krishnamoorthy, the risk management VP of a New York-based investment bank. Krishnamoorthy is accused of trading on confidential information prior to the acquisition of a publicly-traded tech company by a private equity firm. He allegedly made about $48K in illicit profits. Also charged as a relief defendant is his wife Shreya Achar.

According to the SEC, Avaneesh Krishnamoorthy began trading in Neustar Securities after learning that Golden Gate Capital was going to buy the company. He used two brokerage accounts that his employer didn’t know about. Golden Gate Capital had approached the investment bank about financing the acquisition.

Meantime, the U.S. Attorney’s Office for the Southern District of New York has filed its own case against Krishnamoorthy. He faces one criminal securities fraud charge.

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Ex-Oppenheimer Stockbroker Pleads Guilty in Insider Trading Case
David Hobson, an ex-Oppenheimer Holdings (OPY) investment adviser, was sentenced to six months behind bars for insider trading using information provided to him by a friend who was employed with Pfizer Inc. at the time.

Hobson pleaded guilty to the criminal charges against him. He was ordered to forfeit over $385K. His friend, Michael Maciocio, reached a plea deal with prosecutors for his part last year.

Hobson started insider trading in 2008 while employed at RBC Capital Markets and he continued with his illicit activities at Oppenheimer. He was Maciocio’s stockbroker.

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The US Securities and Exchange Commission is charging the partner of a Hong Kong-based private equity firm with securities fraud. The regulator claims that Shaohua (Michael) Yin of Summitview Capital Management Ltd. obtained over $56M of DreamWorks Animation SKG stock by using the US brokerage accounts of five Chinese nationals, including his parents.

When DreamWork’s stock price went up 47.3% after news that Comcast was acquiring it went public, the five accounts made $29M from the DreamWorks trades.

The SEC claims that Yin tried to conceal that he was in charge of the five accounts, which had addresses in Palo Alto and Beijing, but the regulator was still able to identify him as the one behind the suspect trading. Prior to becoming a partner at Summitview Capital, Yin worked for UBS (UBS) and private equity firm Warburg Pincus Asia LLC.

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