Brookline Man and Connecticut Fund Manager Arrested for Million Dollar Insider Trading Scheme
BOSTON – A Brookline man and a Connecticut fund manager were arrested and charged today in U.S. District Court in Boston in connection with their role in an insider trading scheme that netted more than $1 million in illegal profits.
Amit Kanodia, 47, of Brookline, and Iftikar Ahmed, 44, of Greenwich, Conn., were charged with one count of securities fraud. Both were arrested this morning and are scheduled to appear before U.S. District Magistrate Judge Marianne B. Bowler this afternoon.
As alleged in the criminal complaint, prior to April 2013, Kanodia secretly tipped off his friend Ahmed, an executive at a Connecticut-based fund, and another friend, about the contemplated acquisition of Cooper Tire & Rubber Company by India-based Apollo Tyre. Kanodia learned about the possible acquisition from his wife who was the General Counsel of Apollo at the time. In the months leading up to the public announcement of the acquisition, both Ahmed and the associate, purchased shares and options in Cooper Tire which trades on the New York Stock Exchange. On the day of the announcement, Cooper Tire’s share price increased 41% and Ahmed and his associate began selling their interests in the company for a combined profit of more than $ 1 million. It is alleged that both Ahmed and his associate paid Kanodia a portion of their illegal profits.
“The defendants here are alleged to have improperly obtained confidential information from Apollo Tyre and used that information to unlawfully beat the markets and line their own pockets,” said United States Attorney Carmen M. Ortiz. “Trading on insider information is fraud, plain and simple.”
“The integrity of the capital market is seriously compromised when people trade inside information for personal gain,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation in Boston. “The FBI will continue to go after those who violate the securities laws to make sure no one has an unfair advantage.”
The charging statute provides for a sentence of no greater than 20 years in prison, five years of supervised release, a fine of $5 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Ortiz and SAC Lisi made the announcement today. The U.S. Attorney’s Office received valuable assistance from the Securities & Exchange Commission, which today filed a separate civil action in federal court (http://www.sec.gov/news/pressrelease/2015-56.html#.VR1whrqgzal). The case is being prosecuted by Assistant U.S. Attorney Sarah E. Walters, Chief of Ortiz’s Economic Crimes Unit.
The details contained in the complaint are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.