Dublin Man Sentenced To 30 Months’ Imprisonment For Insider Trading In Relation To Securities Of Ross Stores, Inc.
Evidence at Sentencing Showed that Defendant Realized Gains of as much as $8.2 Million
OAKLAND – Saleem M. Khan was sentenced today to 30 months in prison related to his participation in an insider-trading conspiracy and related scheme, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
Khan pleaded guilty to the charges on January 31, 2019. According to the plea agreement, Khan admitted that during the period July 2009 to October 2012, he obtained from a friend material, non-public information relating the sales and financial performance of Ross Stores, Inc. (“Ross”), a discount-clothing retailer then headquartered in Pleasanton, Calif. Khan’s friend worked in Ross’s finance department. Based on the material, non-public information, Khan entered into options contracts regarding Ross securities in advance of Ross’s monthly sales announcements. Khan used brokerage accounts held both in his name and in names of nominees. In his plea agreement, Khan admitted he compensated the Ross “tipper,” including by providing $130,000 to the tipper through third parties and by purchasing items on the tipper’s behalf. Khan also admitted he made profits in excess of $3,500,000 as a result of the scheme. At sentencing, the government presented evidence showing that Khan had made realized gains from trading in Ross option of as much as $8.2 million between July 2009 and October 2012.
On November 2, 2017, a federal grand jury returned a superseding indictment against Khan charging him with one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 1349; nine counts of securities fraud, in violation of 18 U.S.C. § 1348; and one count of obstruction of justice, in violation of 18 U.S.C. § 1505. Khan pleaded guilty to the conspiracy and securities fraud counts. The remaining count was dismissed at today’s sentencing hearing.
Khan was sued by the Securities and Exchange Commission (SEC) pertaining to the same insider-trading scheme in the following civil case: Securities and Exchange Commission v. Saleem Khan et al., Civil Action No. 3:14-cv-02743 HSG (N.D. Cal., filed June 13, 2014). In September 2016, the court entered a final judgment in the civil case against Khan ordering him to pay more than $15 million in disgorgement, penalties, and prejudgment interest. In that case, Khan agreed to settle the charges against him without admitting or denying the allegations in the civil complaint, and he consented to the entry of final judgment.
In addition to the prison term, Judge Gilliam sentenced the defendant to a two-year period of supervised release. The Court scheduled a hearing on October 21, 2019, for the purpose of determining whether and to what extent Khan should be ordered to pay restitution to Ross. Khan may be ordered to pay attorney’s fees incurred by Ross resulting from the company’s participation in the government’s investigation and prosecution of Khan. The defendant will begin serving his prison term on November 4, 2019.
Assistant U.S. Attorneys Kyle F. Waldinger and Karen Beausey are prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by the FBI.