Four California Residents Charged In $12 Million Insider Trading Operation

July 9, 2014 — Company insiders often learn about confidential revenue information that could be misused to make illicit personal profits. But sharing or trading on nonpublic information is a crime. To protect investors and discourage illegal insider trading, the U.S. Congress set up a whistleblower program in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Whistleblowers who notify the Securities and Exchange Commission (SEC) about illegal trading may be rewarded for collaborating with the SEC. Informants could receive compensation equivalent to thirty percent of the amount the government receives, provided the recovery exceeds $1 million.

Former Director At Ross Stores Tipped Off Friend In Advance Of Public Disclosure Of Monthly Sales Figures

Four California residents have been charged with insider trading in Ross Stores stock options in reliance on nonpublic monthly sales results leaked to a friend by a Ross employee. Roshanlal Chaganlal, a finance department director at Ross headquarters in Dublin, California, is alleged by the SEC to have repeatedly tipped off a friend, Saleem Khan, in advance of the company’s disclosure of financial information. Using his own brokerage account as well as his brother-in-law’s account, Khan traded on the information at least 40 times. In addition, Khan passed along the illegal tips to his colleagues at work, Ammar Akbari and Ranjan Mendonsa. Insider trading by the trio resulted in their illicit collective profits of over $12 million.
Between 2009 and 2012, when Chaganlal was fired from Ross, Chaganlal was privy to confidential sales figures to which only a few Ross employees had access. Chaganlal made a habit of passing along these confidential sales figures to Khan to allow him to trade in advance of public sales announcements. Khan made a total of $10.4 million in profits by trading in his own account and his brother-in-law’s account. Khan’s boss, Mendonsa, profited by $800,000 and Akbari made around $2,000 in the insider trading scam.
Khan has also been charged by the SEC with making $450,000 in illicit gains by trading on illegal tips from an insider at Oracle Corporation. Though Khan had had no previous trading history in the securities of Taleo Corporation, a software company, Khan started to buy a large number of Taleo options six days before news became public of the company’s 2012 acquisition by Oracle Corporation.

Whistleblowers Notify SEC of Insider Trading

Company insiders who become aware of insider trading schemes should take care to learn all they can about the Dodd-Frank whistleblower process before they notify the government.While Waters & Kraus is not handling this particular case, we are handling similar cases. If you have similar claims against different insiders or financial workers, contact us or call our attorneys at 855.784.0268.” Gary Paul and Michael Armitage, SEC fraud attorneys in our firm’s California office, where the insider trading in this case occurred, have the experience necessary to protect whistleblowers in insider trading cases.
Contact us by email or phone our securities fraud lawyers at 855.784.0268 to learn how we can work together in SEC fraud cases.

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