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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23952 / September 29, 2017

Securities and Exchange Commission v. Anand Jayapalan et al., No. 2:17-cv-07186 (C.D. Cal. filed Sept. 29, 2017)

SEC Charges Technology Company Insider with Tipping Family Members Ahead of Acquisition

The Securities and Exchange Commission today charged a technology company insider with tipping off several family members in advance of the acquisition of another company.

According to the SEC's complaint, Anand Jayapalan, a SanDisk, Inc. employee, learned that SanDisk was entering into exclusive negotiations to acquire Fusion-io, Inc. The SEC alleges that Jayapalan tipped his wife, Rajni Nair, and his uncle and aunt, Kumar Ananda and Vijaya Ananda, about the pending acquisition. Prior to the public announcement of SanDisk's acquisition of Fusion-io, the SEC alleges that the Anandas bought large amounts of Fusion-io stock, ultimately spending $665,778 to purchase approximately 78,900 shares using eight different brokerage accounts, including approximately 1,000 shares purchased through an account Vijaya Ananda shared with Nair. The SEC alleges that Kumar primarily financed these purchases with a combination of stock sales and margin loans, and did so at a time when his medical practice was in substantial decline, he owed nearly $100,000 in credit card debt, and after he had suffered what he described as a "drastic" reduction in his personal income between 2012 and 2014, as his salary dropped by approximately one-third. On June 16, 2014, the SEC alleges that SanDisk announced that it had offered to acquire Fusion-io's stock, causing the value of the company's stock to increase by approximately 22%, from $9.28 per share to $11.36 per share. The SEC further alleges that once the news of the tender offer broke, the Anandas liquidated their shares, realizing $215,086 in illegal profits.

The SEC's complaint, filed in the U.S. District Court for the Central District of California, charges Jayapalan, Nair, and Kumar Ananda with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The complaint also charges Vijaya Ananda with violating Section 14(e) of the Exchange Act and Rule 14e-3 thereunder. The SEC seeks permanent injunctions, disgorgement plus interest, and civil penalties.

The SEC's investigation was conducted by Tamar Braz, and supervised by Marc Blau. The litigation will be led by Douglas Miller.

The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

SEC Complaint

 

https://www.sec.gov/litigation/litreleases/2017/lr23952.htm


Modified: 09/29/2017