Former Bank Vice President And Friend Charged In Insider Trading Securities Fraud Scam
Former Bank Employee Agrees to Plead Guilty to Charges Involving Sharing Profits from Securities Transactions Based on Insider Information
SAN FRANCISCO – Former Silicon Valley Bank vice president Mounir Gad has agreed to plead guilty to two counts of securities fraud in connection with a scheme to profit by sharing material non-public information regarding the acquisition of companies. The announcement was made by Acting U.S. Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The Office of the United States Attorney filed an information earlier today charging Gad, 34, of San Jose, and Nathan Guido, 38, of San Jose, with the crimes. According to the information, Gad was a trained investment banking professional who repeatedly received training and guidance about the proper use of material non-public and confidential information. Gad also allegedly received and knew about the prohibitions against the improper use of such information including how the use of such information for personal gain may violate the insider trading laws. According to the information, Gad nevertheless violated the insider trading laws on two occasions. Specifically, in April of 2015 and again in August of 2016, Gad obtained material non-public information through his employer when the bank advised clients about financial matters related to the acquisition of certain companies; Gad allegedly shared the non-public information with Guido, who used the information to execute securities transactions. The information alleges Gad and Guido both personally benefitted from the transactions and shared the profits from the illegal trades.
The information charges Gad and Guido with two counts each of securities fraud, in violation of 15 U.S.C. § 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5, 240.10b5-1, and 240.10b5-2, 18 U.S.C. § 2.
At an arraignment earlier today before U.S. Magistrate Judge Donna M. Ryu, Gad pleaded not guilty to the charges but informed the court he has signed a written agreement pursuant to which his plea would change to guilty. Gad further informed the court that he is seeking to have the court accept his guilty plea. A change of plea hearing has been scheduled for August 4, 2021, before the Hon. Lucy H. Koh, U.S. District Judge.
Guido also pleaded not guilty to the charges and acknowledged that he entered into an agreement with the government whereby his prosecution by the government will be deferred if he complies with the terms of the agreement.
An information contains allegations only. Gad and Guido are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. If convicted, the maximum statutory penalties for each count of securities fraud is 20 years in prison and a $5,000,000 fine. The court also may order additional terms of supervised release, fines, forfeitures, and restitution; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The Securities and Exchange Commission has filed a separate enforcement action against Gad and Guido. The announcement of that action can be viewed here.
Assistant U.S. Attorney Sarah E. Griswold is prosecuting this case with assistance from Jessica Leung. The case was investigated by the FBI.