SEC Charges 7 Indian-Origin Techies for Insider Trading Worth $1 Million
The US SEC has charged all 7 with violating anti-fraud provisions of the Securities Exchange Act
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Seven Indian-origin people in California were charged by the US Securities and Exchange Commission (SEC), on Tuesday, 29 March, with insider trading via a scheme and making illegal profits worth over $1 million, reported PTI.
According to the SEC’s complaint, three people identified as Hari Prasad Sure (34), Lokesh Lagudu (31) and Chotu Prabhu Tej Pulagam (29) are friends and worked as software engineers at a California-based cloud computing company Twilio.
The three colleagues at Twilio had access to various databases relevant to the company’s reporting of revenue.
The SEC said that all accused allegedly generated over $1 million in collective profits by insider trading ahead of Twilio's first positive quarter on 6 May, 2020.
The Million-Dollar Scam
The complaint said that Sure tipped his close friend Dileep Kumar Reddy Kamujula (35) who successfully traded in Twilio's options. Lagudu similarly tipped his girlfriend Sai Nekkalapudi (30) and another close friend Abhishek Dharmapurikar (33). Chotu Pulagam alerted his brother Chetan Prabhu Pulagam (31).
Despite the company policy against insider trading, the defendants Sure, Lagudu and Chotu Pulagam knowingly tipped off, or used the brokerage accounts of Kamujula, Nekkalapudi, Dharmapurikar and Chetan Pulagam to trade Twilio options and stock ahead of the company’s 2020 earnings announcement, as per a report by PTI.
The SEC said,
“On several occasions between late March and early May 2020, before Twilio's public earnings announcement, Mr Sure, Mr Lagudu and Mr Chotu Pulagam used internal chat channels to discuss in Telugu whether Twilio might exceed market expectations in its quarterly report of earnings, due in May 2020.”
It added, “We are holding these alleged tippers and tippees accountable for their roles in the scheme."
The SEC's complaint, filed in the Northern District of California, charges each of the defendants with violating anti-fraud provisions of the Securities Exchange Act. Kamujula is also facing criminal charges.
(With inputs from PTI.)
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