US federal authorities have charged seven Indian-origin techies for making over a million dollar illegal profits with insider trading. According to the Securities and Exchange Commission (SEC), Hari Prasad Sure, 34, Lokesh Lagudu, 31 and Chotu Prabhu Tej Pulagam, 29, are friends and worked as software engineers at Twilio, a San Francisco-based cloud computing communications company.
Sure tipped his close friend Dileep Kumar Reddy Kamujula, 35, who successfully traded in Twilio’s options. Mr Lagudu similarly tipped his girlfriend Sai Nekkalapudi, 30, with whom he lived, and he also tipped his former roommate and close friend Abhishek Dharmapurikar, 33. Mr Pulagam tipped his brother Chetan Prabhu Pulagam, 31. All the seven defendants live in California, the Press Trust of India reported quoting the complaint.
The SEC on Monday said insider trading charges against the seven individuals for allegedly generating more than USD 1 million in collective profits by insider trading ahead of Twilio’s positive first quarter 2020 earnings announcement on May 6, 2020.
According to the SEC’s complaint, Sure, Lagudu and Chotu Pulagam had access to various databases relevant to Twilio’s reporting of revenue.
In March 2020, the accused learned through the databases that Twilio’s customers had increased their usage of the company’s products and services in response to health measures taken in light of the Covid-19 pandemic and concluded in a joint chat that Twilio’s stock price would “rise for sure.”
The scheme generated more than USD 1 million in illegal trading profits, according to the complaint.
The SEC complaint said that Mr Sure, Mr Lagudu and Mr Chotu Pulagam “communicated at times in Telugu, a language used frequently in parts of India.” From late March to early May 2020, they engaged in discussions about the upcoming earnings announcement within a private chat channel they created at Twilio.
“On several occasions between late March and early May 2020, before Twilio’s public earnings announcement, Mr Sure, Mr Lagudu and Mr Chotu Pulagam used internal chat channels to discuss in Telugu whether Twilio might exceed market expectations in its quarterly report of earnings, due in May 2020.”
The complaint said that “armed with valuable inside information” they had obtained from Twilio, Mr Sure, Mr Lagudu, and Mr Chotu Pulagam began passing tips to their family and friends through phone calls and in-person visits in advance of Twilio’s earnings announcement on May 6, 2020.
“We allege that this insider trading ring took advantage of valuable revenue information related to the pandemic at a San Francisco tech company,” said Monique C. Winkler, Acting Regional Director of the SEC’s San Francisco Regional Office.
