Former Palo Alto IT Admin in Insider Trading Charges
A former IT administrator at Palo Alto Networks and four others have been charged with insider trading, in a three-year conspiracy said to have netted them over $7 million in profits.
According to a complaint filed by the SEC, Janardhan Nellore used his IT credentials and work contacts to access confidential information about his former employer’s financial performance and quarterly earnings.
He then allegedly traded Palo Alto Networks shares based on that information, and tipped off four friends: Sivannarayana Barama, Ganapathi Kunadharaju, Saber Hussain, and Prasad Malempati.
To cover up the scam, he is alleged to have told the group to use the code word “baby” to refer to the technology company’s stock. It’s also claimed that some of the group kicked back profits to Nellore in small sums to avoid scrutiny.
Nellore is said to have bought one-way tickets to India for himself and his family following an interview with the FBI, and was arrested at the airport. Reports suggest the group made over $7 million from insider trading activity that ran from 2015 to 2018.
“As alleged in our complaint, Nellore and his friends exploited Nellore’s access to valuable earnings information and attempted to hide their misconduct using code words and carefully tailored cash withdrawals,” said Erin Schneider, director of the SEC’s San Francisco Regional Office. “This case highlights our use of enhanced data analysis tools to spot suspicious trading patterns and identify the traders behind them.”
Nellore and Barama are also the subject of criminal charges issued by the US Attorney’s Office for the Northern District of California.
Insider trading is increasingly facilitated by unauthorized IT access to digital information. In January this year, two Ukrainian nationals were charged with hacking the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system, which stores documents related to company disclosures including test filings made before announcements go public.
They then allegedly sold this information to insider traders, making over $4 million in the process.
Source: Information Security Magazine