An analyst with J.P. Morgan Securities and two longtime friends, one an Encino resident, were taken into custody Tuesday morning on suspicion of taking part in an insider trading scheme that netted more than $600,000, the government said.
Ashish Aggarwal, 27, of San Francisco, Shahriyar Bolandian, 26, of the Palms district, and Kevan Sadigh, 28, of Encino, were charged in a federal grand jury indictment that was unsealed Tuesday, said the U.S. Attorney’s Office in Los Angeles.
It charges each defendant with one count of conspiracy to commit securities and tender offer fraud, 13 counts of securities fraud, 13 counts of tender offer fraud and three counts of wire fraud.
Bolandian also is charged with one count of money laundering.
All three surrendered to the Federal Bureau of Investigation on Tuesday and pleaded not guilty during their arraignment in U.S. District Court in downtown Los Angeles, Thom Mrozek, spokesman for the U.S. attorney’s office, said in an email.
They were ordered to stand trial on Oct. 20 before U.S. District Judge Terry J. Hatter.
Bail was set at $150,000 for Bolandian, and $100,000 for Aggarwal and Sadigh.
All three posted bail and were released Tuesday evening, Mrozek said.
The defense
Each of the defendants has retained counsel.
“Mr. Aggarwal denies the charges against him. He has retained Goodwin Procter to represent him in this matter and intends to vigorously defend himself against these allegations,” his attorney Grant P. Fondo, a partner in the Northern California firm and a former Assistant U.S. Attorney in the Northern District of California, said in an email.
Attorneys for the other two men could not be reached for comment.
Sharing inside information
The government said that between June 2011 and June 2013, Aggarwal was employed by J.P. Morgan Securities, LLC, as an investment banking analyst in its San Francisco office.
The indictment states that because of his job, Aggarwal allegedly obtained material, non-public information about upcoming mergers and acquisitions involving publicly traded companies.
It states that Aggarwal disclosed inside information to his friend Bolandian, who in turn shared the information with Sadigh.
Bolandian and Sadigh then allegedly used the insider information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc.
The scheme netted the three more than $600,000 in illicit profits, the government said.
It claims that the money was used in part to cover previous trading losses and to repay liabilities incurred by Aggarwal and Bolandian.
‘Greed is not good’
After being confronted by FBI special agents earlier this year about their trading, Bolandian and Sadigh gave false explanations, according to the indictment.
“Every professional with access to inside information has a duty and responsibility to protect that information so no one gains an unfair advantage in the securities markets,” U.S. Attorney Eileen M. Decker said in a statement.
“Insider trading corrodes the integrity of the markets and undermines confidence among those who choose to trade. We will bring to justice anyone who illegally uses or shares confidential business information that can be used to manipulate the system.”
David Bowdich, the assistant director in charge of the FBI’s Los Angeles Field Office, said in a statement: “Today’s arrests make it clear that greed is not good, and also illustrate the FBI’s commitment to identifying and rooting out corrupt trading practices.”
POSSIBLE SENTENCES
If they are convicted of the crimes alleged in the indictment, the three would face statutory maximum sentences of five years in federal prison for the conspiracy count and 20 years for each of the fraud counts, the government said.
Additionally, Bolandian could be sentenced to as much as 10 years in prison if he is convicted of the money laundering offense.
The insider trading scheme was investigated by the FBI with assistance from the Securities and Exchange Commission.
