- A former revenue recognition manager at optical networking company Infinera Corporation used his position to tip unannounced quarterly earnings and financial performance to a contact, who shared the information with a wider trading ring to generate illegal profits, the Securities and Exchange Commission charged.
- The group made about $1.7 million in profits and avoided losses in a roughly 18-month period before the rev rec manage, Nathaniel Brown, left his job.
- The charge is the latest to come from a data analytics tool the SEC began using last year. “Using sophisticated data analysis, the SEC was able to uncover this insider trading ring and hold each of its participants accountable to ensure the integrity of our markets,” Joseph Sansone, an SEC enforcement chief, said.
According to the complaint, Brown repeatedly tipped Infinera’s unannounced quarterly earnings and financial performance to Benjamin Wylam, a high school teacher and bookmaker, who traded on the information and also tipped it to another contact, Naveen Sood.
Sood allegedly traded on this information and also tipped it to three contacts, Marcus Bannon, Matthew Rauch and Naresh Ramaiya.
The ring also illegally traded on insider information from another company, the SEC said.
In this other arrangement, Bannon tipped Sood with material, nonpublic information about Bannon’s employer, Fortinet Inc. Bannon learned in early October 2016 that Fortinet was unexpectedly going to announce preliminary negative financial results. Bannon tipped this information to Sood, who used it to trade and also tipped it to Wylam and Ramaiya.
The SEC’s complaint charges Brown, Wylam, Sood, Bannon, Rauch, and Ramaiya with violating the Securities Exchange Act of 1934. Bannon agreed to pay a civil penalty of $281,497, Rauch a civil penalty of $128,230, Ramaiya a civil penalty of $65,780 and Sood a civil penalty of $178,320. The final judgments require court approval.
Wylam has consented to a permanent injunction with any civil penalties to be decided later in court. SEC litigation against Brown is continuing.
Separately, the U.S. Attorney’s Office for the Northern District of California is looking at related criminal charges against Brown, Wylam, and Sood.