Nine individuals are facing fraud charges in connection with three separate insider trading schemes, the Securities and Exchange Commission announced last week.
The nine are accused of violating the antifraud provisions of the securities laws in cases involving a total of over $6.4 million in ill-gotten gains. The SEC brought the enforcement actions in federal court in Manhattan, and the U.S. Attorney’s Office for the Southern District of New York brought parallel criminal charges.
The defendants in one case are Amit Bhardwaj, the former CISO of Lumentum Holdings Inc., and his friends, Dhirenkumar Patel, Srinivasa Kakkera, Abbas Saeedi, and Ramesh Chitor.
The SEC alleged that Bhardwaj learned material nonpublic information about Lumentum’s plans to acquire Coherent, Inc. and NeoPhotonics Corporation. Based on that information, he allegedly bought stock in Coherent before the announcement of Lumentum’s acquisition of Coherent and tipped off Patel so that Patel could share in the gains. Bhardwaj was also accused of sharing nonpublic information about Lumentum’s planned acquisition of NeoPhotonics with Kakkera, Saeedi, and Chitor, who then amassed large positions of NeoPhotonics. In all, the SEC said the scheme generated over $5.2 million in illicit profits.
In another action, the SEC alleged that investment banker Brijesh Goel and foreign exchange trader Akshay Niranjan, close friends from business school, made over $275,000 from illegally trading ahead of four acquisition announcements in 2017 that Goel learned about through his employment. Niranjan was accused of buying call options on the target companies and wiring Goel $85,000 for Goel’s share of the proceeds.
In the third case, the SEC said that Seth Markin, a former FBI trainee, and his friend Brandon Wong made approximately $82,000 and $1.3 million, respectively, from illegally trading before the 2021 announcement of a tender offer by Merck & Co., Inc., to acquire Pandion Therapeutics, Inc.
“If everyday investors think that the market is rigged at their expense in favor 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. “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.”
The SEC is seeking permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties in the three cases. Each of the actions originated from the SEC Enforcement Division’s Market Abuse Unit’s Analysis and Detection Center, which uses data analysis tools to detect suspicious trading patterns.
Lewitas Hyman routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655 6002 or through our online contact form for a no-cost evaluation of your matter.
