Convicted Corporate Securities Fraudsters Sentenced To 22 And 12 Months In Prison
Defendants Illegally Transferred, or Used, Insider Information for the Purpose of Trading Infinera Securities
SAN FRANCISCO – Nathaniel A. Brown and Benjamin J. Wylam and were sentenced to 22 months and 366 days in prison, respectively, for their separate roles in a scheme to engage in transactions in corporate securities using material nonpublic information about Sunnyvale-based Infinera Corporation (“Infinera”), announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentences were handed down by the Honorable Edward M. Chen, United States District Judge, following their guilty plea.
Brown, 49, and Wylam, 42, both of San Jose, Calif., pleaded guilty to the charges in separate plea agreements on July 14, 2021. Further, in a related case, on March 31, 2021, Naveen Sood, 49, of Campbell, Calif., signed a written agreement in connection with submitting his guilty plea.
According to Brown’s plea agreement, Brown admitted that, between 2011 and 2017, he was employed as a Senior Revenue Manager at Infinera. The technology company’s common shares were registered pursuant to Section 12(b) of Securities Exchange Act of 1934 and publicly traded on the NASDAQ Stock Market under the ticker symbol INFN. During Brown’s employment at Infinera, he was regularly privy to material nonpublic information about Infinera’s financial performance and financial projections. Beginning in or about April 2016 and continuing until the termination of his employment from Infinera in November 2017, Brown admitted that he regularly shared material nonpublic information that he obtained during his employment with Wylam. Brown admitted he knew Wylam intended to, and did, use the material nonpublic information to purchase Infinera securities in advance of Infinera’s quarterly public earnings announcements.
According to Wylam’s plea agreement, Wylam admitted that between April 2016 and November 2017, he obtained material nonpublic information about Infinera, and then engaged in transactions in Infinera securities. Wylam admitted that he obtained this material nonpublic information directly from Brown. As with Brown, Wylam admitted Infinera’s common shares were registered pursuant to section 12(b) of Securities Exchange Act of 1934 and publicly traded on the NASDAQ Stock Market under the ticker symbol INFN. Wylam acknowledged the gross gains he made from trading based on material nonpublic information belonging to Infinera that he received from Brown amounted to approximately $999,959.
The plea agreements further revealed the steps Brown and Wylam took to conceal their actions and relationship. Both men admitted to having begun using the messaging application WhatsApp to communicate with each other because of its encrypted communications and as an extra measure to conceal the facts that Brown was providing Wylam with material nonpublic information and that the two were friends. Both men admitted that Wylam also “unfriended” Brown on Facebook to achieve these ends.
According to Sood’s plea agreement, Sood admitted he used his own and another person’s brokerage accounts to execute trades based upon material nonpublic information and that he acquired no less than $215,000 in criminal proceeds from violations of the law that are described in his plea agreement.
Brown, Wylam, and Sood each were charged with one count of securities fraud, in violation of 18 U.S.C. § 1348, and each defendant pleaded guilty to the count.
During Brown’s and Wylam’s sentencing proceedings, in addition to prison terms, Judge Chen also ordered forfeiture money judgments against the two defendants. As to Wylam, the court ordered a forfeiture money judgment in the amount of $999,000; as to Brown, the court ordered a forfeiture money judgment in the amount of $30,000. In addition, both defendants were ordered to serve a three-year term of supervised release to begin after their prison term. The defendants will begin serving their prison terms on or before January 10, 2022.
Judge Chen scheduled Sood’s sentencing for December.
Assistant U.S. Attorney Kyle Waldinger of the Special Prosecutions Section of the United States Attorney’s Office for the Northern District of California is prosecuting the case with assistance from Kathy Tat. This case was investigated by the FBI. The Department of Justice appreciates the assistance of the Securities and Exchange Commission.