Former Investment Banking Analyst with J.P. Morgan Securities and Two Friends Charged in $600,000 Insider Trading Scheme
LOS ANGELES – An analyst with J.P. Morgan Securities and two longtime friends were taken into custody this morning after being charged in a federal grand jury indictment that alleges they participated in an insider trading scheme that netted more than $600,000 in illicit profits.
Ashish Aggarwal, 27, of San Francisco; Shahriyar Bolandian, 26, of the Palms District in Los Angeles; and Kevan Sadigh, 28, of Encino, are named in an indictment that was unsealed this morning.
The indictment charges each defendant with one count of conspiracy to commit securities and tender offer fraud, 13 substantive counts of securities fraud, 13 substantive counts of tender offer fraud and three substantive counts of wire fraud. Bolandian also is charged with one count of money laundering.
The defendants surrendered to the FBI this morning, and are scheduled to be arraigned this afternoon in United States District Court in downtown Los Angeles.
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. According to the indictment, through his employment, Aggarwal allegedly obtained material, non-public (inside) information about upcoming mergers and acquisitions involving publicly-traded companies. The indictment alleges that Aggarwal disclosed inside information to his friend Bolandian, who, in turn, shared the information with Sadigh, who is also a friend of Bolandian.
Bolandian and Sadigh allegedly used the inside 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. Through this scheme, Aggarwal, Bolandian and Sadigh allegedly netted more than $600,000 in illicit profits, which the defendants allegedly used to, among other things, cover previous trading losses and to repay liabilities incurred by Aggarwal and Bolandian. After being confronted by special agents with the FBI about their trading in early 2015, Bolandian and Sadigh provided false explanations of the basis of their trading decisions, 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,” said United States Attorney Eileen M. Decker. “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, stated: “The defendants utilized material non-public information relative to stocks for personal gain without regard for the integrity of the marketplace in which they functioned. 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.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they are convicted of the crimes alleged in the indictment, the three defendants would face statutory maximum sentences of five years in federal prison for the conspiracy count and 20 years for each of the substantive fraud counts. Additionally, Bolandian could be sentenced to as much as 10 years in prison if he is convicted of the money laundering offense.
This case is being prosecuted by Assistant United States Attorney Paul G. Stern, along with Trial Attorneys Thomas B.W. Hall and Alexander F. Porter of the Fraud Section in the Criminal Division at the Department of Justice.
The insider trading scheme was investigated by the FBI.
The Securities and Exchange Commission provided valuable assistance. The SEC filed a related civil action this morning that alleges Aggarwal illegally disclosed nonpublic information (see: http://www.sec.gov/news/pressrelease/2015-174.html).