FBI Agents Arrest Sell-Side Tech Analyst Sandeep Aggarwal For Leaking Non-Public Info To A Former SAC Portfolio Manager

FBI Agents Arrest Tech Analyst Sandeep Aggarwal For Leaking Non-Public Info To A Former SAC Portfolio Manager

JULIA LA ROCHE JUL. 30, 2013, 12:08 PM 7,825 1


San Francisco-based technology sell-side analyst Sandeep Aggarwal was arrested yesterday by FBI agents in San Jose, California on insider trading charges, the FBI New York bureau Tweeted. Today, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Aggarwal.  Aggarwal, 40, is charged with one count of conspiracy to commit securities fraud, and one count of conspiracy to commit wire fraud. He has also been civilly charged by the Securities and Exchange Commission. Aggarwal, who lives in India and recently returned to the U.S.,  is accused of tipping off former SAC portfolio manager Richard Lee about a pending deal between Microsoft and Yahoo!.

From the U.S. Attorney’s release:

On the evening of July 9, 2009, AGGARWAL learned from a friend who was an employee of Microsoft that discussions about the Partnership had recommenced and that a transaction was likely within the next few weeks. The next day, AGGARWAL provided information about the Partnership to at least two different hedge funds, including to Richard Lee, then a portfolio manager at SAC Capital Advisors LP. On July 10, 2009, AGGARWAL told Lee, in substance, that he had heard from a source – whom AGGARWAL described as “a senior guy at Microsoft” – that (a) senior Yahoo executives had been meeting with senior Microsoft executives at Microsoft’s offices; (b) senior Microsoft executives were making requests for information that suggested to the sources that a deal was likely to be completed soon; (c) the success of Microsoft’s Bing search engine had caused Yahoo to move closer to Microsoft’s offer; and (d) it was likely that the deal could be announced within the next two weeks. Thereafter, Lee’s hedge fund purchased several hundred thousand shares of Yahoo stock, and Lee purchased 25,000 shares of Yahoo stock in his personal account.

Last week, U.S. prosecutors said in a federal indictment that Lee pleaded guilty to insider trading charges. U.S. prosecutors said that Lee received non-public information in July 2009 about confidential talks between Yahoo! and Microsoft.

“As alleged, Sandeep Aggarwal leveraged his contacts in the technology industry to obtain an illegal edge in the form of inside information about a highly anticipated development, and then lied about his criminal conduct. With his arrest today, we continue our work to investigate and prosecute privileged professionals who think the laws requiring honesty and fair play do not apply to them,” Manhattan U.S. Attorney Preet Bharara said in a release.

Aggarwal worked as an analyst at Collins Stewart when he was allegedly passing the non-public information along, FINRA records show.  There were several articles about him from 2009 talking about a possible deal between Microsoft and Yahoo!. (See herehere and here).

After Collins Stewart, he had been employed with Oppenheimer & Co. and Caris & Co., records show. Before that, he worked at Citigroup, Microsoft and Charles Schwab, according to FINRA.

Last week, Steve Cohen’s $14 billion SAC Capital was indicted by a federal grand jury on criminal charges of insider trading. The hedge fund behemoth was charged with four counts of securities fraud and one count of wire fraud. Defense lawyers for the fund pleaded not guilty.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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