U.S. Attorney’s Office in Chicago Charges Financial Analyst and Former Investment Banker with Fraud for Allegedly Profiting from Insider Trading
CHICAGO — The U.S. Attorney’s Office in Chicago today charged a financial analyst and a former investment banker with securities fraud for allegedly earning profits from trades they made with non-public information.
JASON NAPODANO, a former Managing Director of a Chicago investment research firm, used material, non-public information he obtained while preparing equity research reports about companies to purchase and sell stock in those companies, according to a criminal information filed in federal court in Chicago. The illegal trading profits netted Napodano approximately $143,000, the information states.
In a related case, BILAL BASRAI, a former Managing Director of a Chicago investment banking firm, used material, non-public information to earn approximately $37,157 in illegal profits from the purchase and sale of stock in three companies. Through his legal counsel, Basrai authorized the U.S. Attorney’s Office to disclose that Basrai has cooperated with the government’s investigation and intends to plead guilty to the charge contained in the information.
Napodano, 43, of Waxhaw, N.C., and Basrai, 43, of Naperville, Ill., are each charged with one count of securities fraud. Arraignments in federal court in Chicago have not yet been scheduled.
The charges were filed by the Securities and Commodities Fraud Section of the U.S. Attorney’s Office in Chicago. The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The U.S. Securities and Exchange Commission provided valuable assistance.
According to the charges, Napodano’s alleged fraud scheme began in October 2012 and continued through May 2015. The charges allege that, prior to the public release of equity research reports that contained positive recommendations about the companies, Napodano purchased stock in those companies. He then allegedly sold the stock for a profit after his reports were publicly released and the stock prices of the companies increased. In doing so, Napodano allegedly misappropriated material, non-public information – the timing and contents of the research reports – that belonged to his employer. Napodano also traded based on inside knowledge of a company’s announcement of an in-licensing agreement, the information states.
Basrai’s fraud scheme spanned the first seven months of 2014. Basrai allegedly learned non-public information about a secondary stock offering, an in-licensing agreement, and the release date of a research report, and used it to make profitable trades of three companies’ stock.
The public is reminded that an information is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Securities fraud is punishable by up to 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys Jason Yonan and Matthew Kutcher.