Indian American pleads guilty to insider trading
Faces 20 years in prison for his role in multi-million dollar scheme to commit securities fraud
A former Indian American executive pleaded guilty to 13 counts of insider trading by misusing information about impending corporate transactions to trade on that information and tip his associates.
Amit Bhardwaj, 49, the former Chief Information Security Officer at Lumentum Holdings Inc, was arrested and charged in July 2022 and pled guilty on March 22 before US District Judge Gregory H. Woods, according toi a Justice Department release.
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He pled guilty to seven counts of securities fraud and two counts of wire fraud, each of which carries a maximum term of 20 years in prison, and four counts of conspiracy to commit securities fraud and wire fraud, each of which carries a maximum term of five years in prison.
Bhardwaj is scheduled to be sentenced by Judge Woods on July 11.
Bhardwaj “ironically failed to keep the confidential information he was trusted with secure as he shared it with numerous friends and a family member in order to make a profit,” said Damian Williams, US Attorney for the Southern District of New York.
“Not only did Bhardwaj betray his company and cheat the securities markets, but when confronted by the FBI, he also schemed to conceal his illicit behavior and obstruct the investigation.”
According to the allegations in the Indictment and statements made in public court proceedings in December 2020, Bhardwaj learned that Lumentum was considering acquiring Coherent, Inc.
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Based on this information, Bhardwaj himself purchased Coherent stock and call options, and Bhardwaj tipped three associates –– his friend Dhirenkumar Patel, another friend, and one of Bhardwaj’s close family relatives ––and these individuals all traded in Coherent securities as a result.
Bhardwaj and Patel agreed that Patel would pay Bhardwaj 50% of the profits that Patel earned by trading in Coherent based on the material, non-public information (MNPI) provided by Bhardwaj.
When Coherent’s stock price increased substantially following the announcement of the Lumentum acquisition, Bhardwaj, his close family member, his friend Patel, and another friend closed their positions in Coherent securities and collectively profited by nearly $900,000.
Around October 2021, Bhardwaj learned that Lumentum was engaged in confidential discussions with Neophotonics Corporation about a potential acquisition. Bhardwaj provided this information to Srinivasa Kakkera, Abbas Saeedi, and Ramesh Chitor, and these individuals all traded in Neophotonics securities as a result.
In connection with Chitor’s trading, Bhardwaj and Chitor agreed that Chitor and Bhardwaj would split the profits equally. When Neophotonics’ stock price increased substantially following the announcement of the Lumentum acquisition in November 2021, Kakkera, Saeedi, and Chitor closed their positions in Neophotonics securities and made collectively approximately $4.3 million in realized and unrealized profits.
After they were interviewed by the Federal Bureau of Investigation voluntarily and served with federal grand jury subpoenas on March 29, 2022, Bhardwaj took steps to obstruct the federal investigation of their conduct.
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On the day of FBI interviews, Bhardwaj drove to the homes of certain of his co-conspirators to encourage them not to tell the federal authorities the truth about their insider trading scheme.
Bhardwaj and his associates subsequently met in person on multiple occasions and discussed, among other things, potential false stories that would conceal their insider trading scheme as well as creating false documents to buttress lies regarding payments that were, in reality, related to the insider trading scheme, according to the release.
