US SEC charges 7 Indian-origin individuals in $1 mln insider trading scheme
SEC brought insider trading charges against the seven people for allegedly gaining over $1 million
The accused successfully traded in cloud computing communications startup Twilio's options
Three of them worked as software engineers at Twilio which is located in San Francisco
Hari Prasad Sure, 34, Lokesh Lagudu, 31, and Chotu Prabhu Tej Pulagam, 29, are friends who worked as software engineers at Twilio, a cloud computing communications startup located in San Francisco, according to PTI.
Sure allegedly alerted his close friend Dileep Kumar Reddy Kamujula, 35, who successfully traded in Twilio's options, according to the complaint. Lagudu also tipped his girlfriend Sai Nekkalapudi, 30, with whom he shared a house, as well as his former roommate and close friend Abhishek Dharmapurikar, 33. Pulagam tipped his 31-year-old brother Chetan Prabhu Pulagam, reported PTI. The defendants are all from California.
The SEC brought insider trading charges against the seven people for allegedly gaining over $1 million in combined profits through insider trading prior to Twilio's favourable first quarter 2020 results report on May 6, 2020. Sure, Lagudu, and Chotu Pulagam, according to the SEC's complaint, had access to several databases related to Twilio's revenue reporting.
According to the allegations, around March 2020, they discovered through databases that Twilio's customers had increased their usage of the company's products and services in response to health measures implemented in response to the Covid-19 pandemic, and they concluded in a joint chat that Twilio's stock price would undoubtedly rise.
According to the SEC's complaint, despite a company policy prohibiting them from insider trading, 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 in advance of its May 6, 2020 earnings announcement while in possession of confidential customer usage information. The plan netted more than $1 million in illegal trading gains.
Kamujula, Nekkalapudi, Dharmapurikar, and Chetan Pulagam were all employees of other publicly listed companies who knew it was illegal for insiders to tell another person to trade shares based on substantial, nonpublic information.
Sure, Lagudu and Chotu Pulagam used their friends and family to earn financially from their insider trading plan while avoiding investigation.
Sure, Pulagam, and Chotu Pulagam discussed in the chat channel on May 4, 2020 (just two days before the scheduled Twilio earnings announcement) their expectation that Twilio's stock price, which was then trading around $110 per share, would skyrocket following the earnings announcement and prepared to sell their own company restricted stock units post-announcement.