The US Securities and Exchange Commission (SEC) recently announced insider trading charges against two Canadian software engineers who reportedly “made $1.6 million by trading ahead of non-public, market-moving financial information.”
According to the SEC’s complaint, from at least May 2018 to July 2021, Harpreet Saini and John Lester Mandac Natividad, both of Ontario, “were employed by a newswire distribution company specializing in corporate press releases, and had access to its internal press release distribution system that allowed them to preview headlines, times, and publication dates of forthcoming announcements.”
As alleged, Saini and Natividad “collectively traded in advance of more than 1,600 announcements distributed by their employer and would routinely exit their positions after the market reacted to the news in the press releases.”
Michele Wein Layne, Regional Director of the Los Angeles Regional Office, said:
“Insider trading erodes public trust in the financial markets and gives an unfair advantage to those who trade using non-public information. As alleged in our complaint, Saini and Natividad engaged in an insider trading scheme, which spanned several years, to enrich themselves at the expense of others, and brazenly bragged about it via text message with each another.”
The SEC’s complaint, filed in the District of New Jersey, “charges Saini and Natividad with violating the antifraud provisions of the Securities Exchange Act of 1934.”
The Ontario Securities Commission (OSC) has “announced that Saini and Natividad have been charged with fraud and insider trading offenses under the Ontario Securities Act.”
The SEC’s investigation was “conducted by David S. Brown with assistance from Darren Boerner and John S. Rymas of the Market Abuse Unit’s Analysis and Detection Center. It was supervised by Marc J. Blau of the Los Angeles Regional Office.”
The litigation will be “led by Stephen Kam and Gary Leung.”
The SEC “appreciates the assistance of the OSC.”
As reported in August 2022, the first case of prosecuted insider trading in crypto took an interesting twist as the former Coinbase (Nasdaq:COIN) manager accused of abusing his position at the company to trade in advance of news has pleaded guilty to the charges of insider trading.
According to a report by Reuters, Isha Wahi, told US District Judge Loretta Preska that insider trading applies to securities and commodities, and crypto does not qualify. His brother, Nikhil Wahi, also entered the same not guilty plea.
The Wahi’s, along with acquaintance Sameer Ramani (who has yet to be apprehended), are facing both a civil action by the Securities and Exchange Commission (SEC) as well as criminal charges from the US Department of Justice. The enforcement action commenced by the SEC claims that some of the cryptocurrencies are securities, an assertion Coinbase disputes, while the criminal charges does not use the term securities.