SAC Insider Trading – Ex SAC Capital Hedge Fund Employee Richard Lee Tipster Sandeep Aggarwal Arrested.
Former Collins Stewart LLC internet analyst SandeepAggarwal is charged with one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud, U.S. Attorney Preet Bharara’s office said.
“Sandeep Aggarwal leveraged his contacts in the technology industry to obtain an illegal edge in the form of inside information about a highly anticipated development, then lied about his criminal conduct,” Bharara said in a statement. “We continue our work to investigate and prosecute privileged professionals who think the laws requiring honesty and fair play do not apply to them.”
Aggarwal provided material nonpublic information about a strategic partnership in Internet search and advertising between Microsoft Corp. and Yahoo! Inc. (YHOO) to two different hedge funds, including SAC, the U.S. alleged in a criminal complaint unsealed today. Richard Lee pleaded guilty on July 23 to trading on information provided by a source at Yahoo and is cooperating with the U.S.
Sandeep Aggarwal learned from a friend who was a Microsoft employee about the partnership discussions and that a transaction was likely to be announced within weeks, prosecutors alleged.
The next day, Aggarwal gave the information to Richard Lee, who was then a portfolio manager at hedge fund SAC, and told him he had heard from a source, who Aggarwal described as “a senior guy at Microsoft.” Aggarwal told Lee that Yahoo executives had been meeting with senior Microsoft officials at Microsoft offices, and that an announcement would be made on the agreement within two weeks, the U.S. alleged in the complaint.
As a result of Aggarwal’s tips, hedge fund SAC Capital on July 10, 2009, purchased “several hundred thousand shares of Yahoo stock” while Lee bought 25,000 Yahoo shares in his personal account, according to the criminal complaint.
Sandeep Aggarwal, 40, of Gurgon, India, was arrested yesterday by agents with the Federal Bureau of Investigation in San Jose, California, as part of the government’s six-year initiative against insider trading at hedge funds.
SAC hedge fund former fund manager Richard Lee
Richard Lee, who managed a $1.25 billion portfolio at SAC hedge fund and worked at the firm until March 2013, focused on “special situations” including mergers and acquisitions, private equity buy-outs, and corporate restructurings in publicly-traded companies, Bharara’s office said.
He pleaded guilty to conspiracy and securities fraud, admitting that in 2009, he got illegal tips about Yahoo! Inc. and 3Com Corp., generating more than $1.5 million in profits for the hedge fund, according to a related Securities and Exchange Commission complaint.
The SEC filed an amended complaint against Lee today adding Aggarwal to its insider trading case and saying that its investigation was continuing. The commission said that Aggarwal, who lives in India, had recently returned to the U.S.