NEW YORK: A 42-year old Indian-origin executive has pleaded guilty to charges of engaging in a scheme to commit insider trading in which he made thousands of dollars of illegal profits.
Avaneesh Krishnamoorthy worked as a vice president and risk management specialist for a Manhattan-based investment bank.
He pleaded guilty on Thursday to a criminal Information charging him with engaging in the insider trading scheme.
He made over US $78,000 by trading in the stock and options of three publicly traded companies based on material nonpublic information he misappropriated from the investment bank and its parent company, Acting US Attorney for the Southern District of New York Joon Kim said.
He pleaded guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of US $5 million. He is scheduled to be sentenced in November this year.
“As he admitted in federal court, Avaneesh Krishnamoorthy abused his position as an investment bank executive to get nonpublic information about several companies and then trade on it. We remain committed to prosecuting financial professionals whose greed drives them to break the law,” Kim said.
According to allegations in court documents, as a vice president and risk management specialist, Krishnamoorthy was given access to material, non-public information concerning mergers and acquisitions in which the investment bank was potentially going to be retained.
In November 2016, the investment bank was contacted about financing the acquisition by a private equity fund of technology company Neustar whose shares are traded on the New York Stock Exchange.
Krishnamoorthy received multiple emails regarding the investment bank’s potential involvement in the transaction, which also summarized the mechanics of the deal.
In violation of the company’s policies and in breach of his duties to the company and its clients, Krishnamoorthy used this material nonpublic information to acquire Neustar stock and options. In the days and weeks after receiving the emails, Krishnamoorthy purchased numerous Neustar call options and hundreds of shares of Neustar stock before the public announcement of the transaction.
He did not reveal these trades or the existence of the underlying brokerage accounts to the company. The price of Neustar stock increased by approximately 20 per cent following the public announcement of the fund’s acquisition of Neustar in December 2016.
Krishnamoorthy also used material nonpublic information that he received from the company to make profitable trades in securities of two other companies.