Can’t Tell the Insiders Without a Program!

MANHATTAN (CN) - The SEC added defendant Sandeep Aggarwal to its lawsuit against accused S.A.C. Capital Advisors inside trader Richard Lee, and federal prosecutors charged Aggarwal separately.

Lee was charged last week, as the SEC went after a slew of employees of billionaire hedge fund trader Steven A. Cohen's employees.

In a separate, two-count complaint of conspiracy to commit wire fraud and securities fraud, an FBI agent lays out details of the scheme.

In the amended SEC complaint against Lee, and now Aggarwal, the SEC claims Lee made $1.5 million for an SAC Capital hedge fund from inside trading on 3Com and Yahoo! shares.

Aggarwal, 40, of India was a senior Internet research analyst for a registered broker dealer in San Francisco from April 2008 until April 2010.

According to the amended SEC complaint: "On July 10, 2009, Lee was tipped by Aggarwal, a sell-side research analyst about nonpublic negotiations between Yahoo and Microsoft Corp. ('Microsoft') to enter into an internet search engine partnership. Aggarwal informed Lee that the information came from a close friend who worked at Microsoft (the 'Microsoft Insider'), that the probability of a Microsoft-Yahoo partnership agreement, which had long been the subject of market rumors, had increased, and that a deal was likely to be announced in the next two weeks.

"Shortly after receiving this material nonpublic information, Lee purchased hundreds of thousands of shares of Yahoo stock for the portfolio that he managed on behalf of SAC Capital, and 25,000 shares of Yahoo stock for his own personal trading account. As a result of these trades, an SAC Capital hedge fund generated substantial profits, and Lee also reaped gains in his personal account."

The SEC seeks disgorgement, penalties and injunctions.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit