SEC Charges Two Indian Americans Among Six Others With Insider Trading

Naveen Sood and Naresh Ramaiya have agreed to pay civil penalties for violating the SEC norms.

The SEC has charged six persons for insider trading. The SEC was prompted of the deals using data analysis. 

(Photo Courtesy: US SEC website)

The United States Security and Exchange Commission (SEC) has charged six persons from Silicon Valley, two of whom are Indian Americans, with insider trading.

The SEC has had brought up both civil and criminal charges against Naveen Sood, Naresh Ramaiya and four others alleging their involvement in sharing unlawful tips and trading of insider information about stocks of two tech companies – Infinera and Fortinet.

The members of the trade ring generated nearly $1.7 million in profits and losses avoided by trading on the confidential earnings information, an SEC press release mentioned.

What Does the Complaint Detail?

The SEC complaint states Nathaniel Brown, the revenue recognition manager for Infinera, tipped his friend Benjamin Wylam, a high school teacher of the company's unannounced quarterly earnings. He gave this information to Naveen Sood. Sood also acquired information about Fortinet's finances from Marcus Bannon in exchange of the information from Wylam. Further, Naveen Sood shared this information with Matthew Rauch and Naresh Ramaiya, both of whom illegally traded on this information.

The SEC has charged all six with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Bannon, Rauch, and Ramaiya consented to the entry of final judgments without admitting or denying the allegations in the complaint. Ramaiya agreed to pay a civil penalty of $65,780. Sood also pleaded guilty, consented to the entry of a final judgment and agreed to pay a civil penalty of $178,320.

The SEC said it discovered the alleged trading ring using sophisticated data analysis. Regulators have developed data-mining tools in recent years that allow them to hunt for evidence of trader groups making suspiciously well-timed trades, The Wall Street Journal reported.

The final judgments would permanently enjoin Bannon, Rauch, Ramaiya, and Sood from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

In parallel proceedings, the US Attorney's Office for the Northern District of California announced related criminal charges against Brown, Wylam, and Sood, the SEC press release said.