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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22763 / July 30, 2013

Securities and Exchange Commission v. Richard Lee and Sandeep Aggarwal, Civil Action No. 13-CV-5185 (SDNY) (RMB)

SEC Charges Tipper of Confidential Information to S.A.C. Capital Portfolio Manager

On July 30, 2013, the Securities and Exchange Commission charged the tipper of confidential information to a S.A.C. Capital portfolio manager who has been charged with insider trading.

The SEC amended its complaint against Richard Lee, who was charged last week, to additionally charge Sandeep Aggarwal, a sell-side analyst who tipped Lee in advance of a July 2009 public announcement about an Internet search engine partnership between Microsoft and Yahoo. Lee purchased large amounts of Yahoo stock in the S.A.C. Capital hedge fund that he managed as well as in his personal trading account on the basis of the inside information.

In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Aggarwal, who lives in India but recently returned to the U.S.

The SEC alleges that Aggarwal learned confidential details about the significant progress of the Microsoft-Yahoo negotiations from his close friend at Microsoft on July 9, 2009, and he tipped Lee with the information during a telephone call the following day. When the information was reported in the media almost a week later, Yahoo's stock price rose approximately 4 percent. S.A.C. Capital and Lee reaped substantial profits from the Yahoo shares that he purchased after speaking to Aggarwal.

According to the SEC's amended complaint filed in federal court in Manhattan, Aggarwal covered both Microsoft and Yahoo for his research firm and regularly received periodic updates from his inside source at Microsoft. Upon learning that Microsoft and Yahoo were potentially within two weeks of finalizing a deal, Aggarwal shared very specific details with Lee. Aggarwal assured him that the information came from a close friend at Microsoft who was reliable and accurate.

The SEC's amended complaint charges Aggarwal and Lee with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The amended complaint seeks a final judgment ordering Aggarwal and Lee to pay disgorgement of ill-gotten gains plus prejudgment interest and financial penalties, and permanently enjoining them from future violations of these provisions of the federal securities laws.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2013/lr22763.htm


Modified: 07/30/2013