An Indian-American former IT professional was convicted of four counts of securities fraud in the US state of California for using a company’s confidential information for trading in its securities, making an illicit profit of $7 million, authorities said.
Sivannarayana Barama (48), who had earlier worked at multiple technology firms in the Silicon Valley, was charged with his co-defendant for securities fraud and conspiracy to commit securities fraud by a superseding indictment in December 2019, United States Attorney Office of Northern District of California said in a statement on Friday.
The co-defendant pleaded guilty plea to related charges in 2019. Barama proceeded to a jury trial, and the jury returned its verdicts against Barama on December 13, the statement said.
Barama formerly worked as a contractor at Palo Alto Networks, a public company headquartered in Santa Clara, California and listed on the NASDAQ exchange.
He used Palo Alto Networks’ quarterly financial performance even before that information was released to the public and then traded in that company’s stock while that information was still confidential, according to US Attorney Stephanie M Hinds and Federal Bureau of Investigation Special Agent in Charge Robert K Tripp.
As per the evidence presented at trial, during his time with the company, Barama met an employee who worked in the company’s information technology department.
From at least October 2016 through September 2017, the employee learned confidential inside information about the company’s quarterly revenue and financial performance through his employment.
Trial evidence demonstrated that the Palo Alto Networks employee traded on that confidential information himself in nominee accounts and also provided Barama with the information along with trading instructions.
He used confidential financial information and trading instructions to purchase Palo Alto Networks stock options.
Once the company publicly announced its earnings for a prior quarter, the stock price reacted to the public disclosure and Barama’s earlier option trades promptly became highly profitable, according to a statement issued by the attorney's office.
With the help of the information, Barama’s trades helped him earn profits more than five times the amount he had invested, it said.
Barama ultimately made profits of $7.3 million on his options trades based on confidential information obtained ahead of four different Palo Alto Networks earnings announcements, it said.
He now faces a maximum statutory sentence of 25 years in prison.
(PTI)
Damian Talbot