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Indian pleads guilty to insider trading charges in US

New York, Nov 9, 2013, (PTI)

An Indian internet analyst has pleaded guilty here to insider trading charges for his involvement in sharing confidential information about technology companies Microsoft and Yahoo.

Sandeep Aggarwal, a Gurgaon resident, faces up to 25 years in prison and over USD 5 million in fine.

Aggarwal, 40, was arrested in connection with the insider trading scheme in July this year and following a cooperation agreement, pled guilty yesterday before US Magistrate Judge Ronald Ellis in Manhattan federal court to one count of conspiracy to commit securities fraud and one count of securities fraud.


Aggarwal's guilty plea was announced by Manhattan's top India-born federal prosecutor Preet Bharara who has led a massive government crackdown on insider trading on Wall Street, netting several high profile executives including Indian-American former Goldman director Rajat Gupta and former billionaire hedge fund founder Raj Rajaratnam.

The latest feather in Bharara's prosecutor cap is guilty pleas on insider trading charges by Steven Cohen-led hedge funds SAC Capital Advisors.

Bharara said the investigation into Aggarwal's conduct is "continuing".

Aggarwal, a former equity research analyst for a San Francisco-based financial services firm, faces a maximum sentence of five years in prison and a fine of USD 250,000 for the conspiracy charge. The securities fraud count carries a maximum jail term of 20 years and USD 5 million in fine.

He will be sentenced in May next year before US District Judge Colleen McMahon.

According to the superseding information and court documents, Aggarwal was involved in a scheme from April 2008 to March 2010 to disclose inside information concerning a strategic partnership between Microsoft and Yahoo.

Aggarwal had several discussions with one of his friends, who was an executive in Microsoft's internet search business, about the likelihood of a partnership between Microsoft and Yahoo.

Two senior sales executives at the Aggarwal's firm also arranged meetings and telephone calls between him and the firm's clients to facilitate transmission of information Aggarwal had learnt about the status of the partnership.

On one occasion in July 2009, Aggarwal learned from his friend at Microsoft that discussions about the partnership with Yahoo had recommenced and that a transaction was likely within the next few weeks.

Aggarwal shared this inside information with senior sales executives at his firm who then arranged for him to provide the confidential information to representatives of certain hedge fund clients of the firm.

One of the representatives to whom Aggarwal provided the inside information was Richard Lee, then a portfolio manager at SAC Capital Advisors.

Following the conversations Aggarwal had with hedge fund clients, the portfolios managed by certain portfolio managers of those clients, including Lee, purchased shares of Yahoo securities.

After official confirmation that a transaction between Microsoft and Yahoo would be announced, the portfolios managers, including Lee, sold Yahoo stock and generated substantial profits.

Lee has pleaded guilty to insider trading charges.

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