SEC charges FBI trainee, investment banker, CISO with insider trading

Rick Steves

“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.”

The Securities and Exchange Commission has charged nine individuals with insider trading for three separate alleged schemes that together yielded more than $6.8 million in ill-gotten gains.

Those charged include a former chief information security officer (CISO), an investment banker, and a former FBI trainee, all of whom allegedly shared confidential information with their friends, who then traded on that confidential information.

All three enforcement actions originated from the SEC Enforcement Division’s Market Abuse Unit’s (MAU) Analysis and Detection Center. The SEC unit uses data analysis tools to detect suspicious trading patterns.

Holding bad actors accountable

Gurbir S. Grewal, Director of the SEC’s Enforcement Division, said: “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. 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. That’s what’s required to restore investor trust and confidence.”

All nine defendants in all three cases were charged with violating the antifraud provisions of the securities laws. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.

Ex-Lumentum Chief Information Security Officer Amit Bhardwaj allegedly helped his friends, Dhirenkumar Patel, Srinivasa Kakkera, Abbas Saeedi, and Ramesh Chitor, trade ahead of two corporate acquisition announcements by Lumentum, thereby generating more than $5.2 million in illicit profits.

Through his work at Lumentum, he became aware of the company’s plans to first acquire Coherent, Inc. and later acquire NeoPhotonics Corporation. He then allegedly purchased the respective securities ahead of the announcements and shared the information with his friends.

Ex-investment banker Brijesh Goel and his friend Akshay Niranjan, who was a foreign exchange trader at a large financial institution, made more than $275,000 from illegally trading ahead of four acquisition announcements in 2017.

Brijesh Goel learned about the four acquisitions through his employment. The complaint further alleges Niranjan purchased call options on the target companies and later wired Goel $85,000 for Goel’s share of the proceeds.

Ex-FBI trainee Seth Markin was also charged by the same SEC unit for partnering with friend Brandon Wong in an insider trading scheme. They made approximately $82,000 and $1.3 million, respectively, from illegally trading ahead of the February 2021 announcement of a tender offer by Merck & Co., Inc., to acquire Pandion Therapeutics, Inc.

Seth Markin secretly reviewed the binder of deal documents about the planned tender offer from his then-romantic partner, who worked as an associate for a law firm representing Merck on the deal, traded on the information, and tipped his close friend Wong. Wong bought Markin a Rolex watch to thank him for the tip, according to the investigation.

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