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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Monday, April 24, 2017

Acting Manhattan U.S. Attorney And FBI Assistant Director Announce Insider Trading Charges Against Investment Bank Vice President

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that AVANEESH KRISHNAMOORTHY, who works as a vice president and risk management specialist for a Manhattan-based investment bank (the “Investment Bank”), was arrested this morning and charged with insider trading. KRISHNAMOORTHY made approximately $48,000 in connection with stock and options trading based on material nonpublic information he misappropriated from the Investment Bank and its parent company (the “Company”), about a private equity fund’s potential acquisition of a publicly traded company.

KRISHNAMOORTHY was presented today in Manhattan federal court before United States Magistrate Judge Kevin Nathaniel Fox.

Acting U.S. Attorney Joon H. Kim said: “Avaneesh Krishnamoorthy is charged with violating his duty to his company and trading on insider information. He allegedly exploited his access to information about a pending acquisition to purchase stock and options, making tens of thousands of dollars in illegal profit for himself. This Office remains committed to enforcing the nation’s securities laws to protect the fairness and integrity of the markets.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “When one has access to material nonpublic information, they are afforded significant knowledge that could give them a competitive edge in stock and options trading. But, as we all know, it’s illegal to use this information in furtherance of personal gain. As alleged today, Krishnamoorthy ignored these rules, using the information at his fingertips to his advantage, and made personal profits in the tens of thousands. The FBI and our partners will continue to investigate and prosecute those who cheat the system in this way.”

According to the Complaint filed today Manhattan federal court[1]:

As a vice president and risk management specialist, KRISHNAMOORTHY had access to material nonpublic information concerning mergers and acquisitions for which the Investment Bank might potentially provide financing. In November 2016, a private equity fund (the “Fund”) contacted the Investment Bank concerning financing for the Fund’s acquisition of Neustar, Inc. (“Neustar”), a publicly traded company whose shares trade on the New York Stock Exchange. Around that time, KRISHNAMOORTHY received multiple emails regarding the Investment Bank’s potential involvement in the transaction, including emails that summarized the details of the deal. In violation of the Company’s policies and in breach of his duties to the Company, KRISHNAMOORTHY used this material nonpublic information to acquire Neustar stock and options. In the days and weeks after receiving the emails, and prior to the public announcement of the Fund’s acquisition of Neustar, KRISHNAMOORTHY purchased numerous Neustar call options and shares of Neustar stock. Purchases of Neustar securities took place in brokerage accounts held in the names of both KRISHNAMOORTHY and his spouse. Contrary to the policies of the Company, KRISHANMOORTHY did not reveal these trades or the existence of these brokerage accounts to the Company.

The public announcement of the Fund’s acquisition of Neustar on December 14, 2016, resulted in an approximately 20 percent increase in the value of Neustar stock in the hours following the announcement, resulting in a corresponding increase in the value of the call options and equity stock held by KRISHNAMOORTHY and his spouse. As a result of the insider trading alleged in the Complaint, KRISHNAMOORTHY generated at least $48,000 in profits.

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KRISHNAMOORTHY is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Kim praised the investigative work of the FBI and thanked the SEC, which has filed civil charges in a separate action. He added that the FBI’s investigation is ongoing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Brendan F. Quigley is in charge of the prosecution.

The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Topic(s): 
Securities, Commodities, & Investment Fraud
Press Release Number: 
17-112
Updated April 24, 2017