IT Administrator, along with his five friends, charged for Insider Trading, who repeatedly traded on confidential earnings information about a cloud-computing company and made millions of dollars in trading profits.
What is Insider Trading :
Using or passing the inside and non-public information to trade the shares
Let’s assume you work in a department where you have access to financial statements and earning details of a company. This company is going to announce quarterly earnings results, which are excellent and will increase the share price of the company. You share this information with someone who quickly buys lots of shares and makes a profit. Similarly, if you have insider information that points out that share price is going to drop, and you provide a tip to sell all the stocks ahead of earnings announcements.
What happened here:
- Janardhan Nellore, who was an IT administrator at Palo Alto Networks Inc., used his IT credentials and work contacts to obtain highly confidential information about his employer’s quarterly earnings and financial performance.
- Nellore not only did trade based on the private non-public information but also tipped shared information with his friends, Saber Hussain, Sivannarayana Barama, Ganapathi Kunadharaju, and Prasad Malempati, who also traded.
- Nellore used the code word “baby” for his employer’s stock, and suggesting they “exit baby,” or “enter few babies.”
- As per SEC, Nellore received profit from traders who benefitted from tip
- US FBI interviewed Nellore about the trading in May, after that he immediately booked one-way tickets to India but was arrested at the airport
I dont know why people would do such things, I hope people will learn the lesson and such cases on Insider Trading will decrease.