Arjun Sekhri, Amolak Sehgal, Pratima Rajan, Fuad Dow, Gordon W. Cochrane, Martin L. Thifault, Rohina Sharma, and Sharad Kapoor, Defendants, and Mahendar Sekhri And Sharda Sekhri, relief defendants

Litigation Release No. 17636 / July 30, 2002

SEC v. Arjun Sekhri, Amolak Sehgal, Pratima Rajan, Fuad Dow, Gordon W. Cochrane, Martin L. Thifault, Rohina Sharma, and Sharad Kapoor, Defendants, and Mahendar Sekhri And Sharda Sekhri, relief defendants, Civil Action No. 98 Civ. 2320 (S.D.N.Y.) (RPP)

Former Fugitive Investment Banker Ordered to Pay More than $9 Million for Insider Trading

The Securities and Exchange Commission announced that on July 25, 2002, Judge Robert P. Patterson of the Southern District of New York entered a final judgment granting the SEC's motion for summary judgment against Arjun Sekhri, 37, an Indian national who formerly worked as an investment banking associate at Salomon Smith Barney, Inc. in New York City. Based on its findings, the Court permanently enjoined Sekhri from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3, and ordered him to disgorge $957,892.55 in insider trading profits of the individuals who traded based upon his tips. The SEC has already recovered more than $1.6 million in disgorgement from other defendants, and the amount that Sekhri has been ordered to disgorge represents the remaining illegal profits that had not yet been recovered in this action. Sekhri was also ordered to pay prejudgment interest of $376,879.66, and to pay the maximum civil penalty of $7,727,772.21, which is three times the total illegal profit of $2,575,924.07 made by Sekhri's tippees.

The Court found that, between September 1997 and January 1998, Sekhri, Amolak Sehgal, Pratima Rajan, Fuad Dow, Gordon W. Cochrane, Martin L. Thifault, Rohina Sharma, Sharad Kapoor, and Sekhri's father, Mahendar Sekhri, engaged in an insider trading scheme in which Sekhr's tips led to trades by the individuals purchasing securities of MCI Communications Corp., Brooks Fiber Properties, Inc., Carson Pirie Scott & Co., Inc., Central and South West Corp., and Southern New England Telecommunications Corp., in advance of six merger and acquisition announcements involving these companies. Sekhri's repeated tips of inside information to his tippees generated illegal profits of approximately $2.5 million.

In January 1998, after learning that the SEC was investigating this trading, Sekhri quickly fled the United States and traveled to India to avoid prosecution. On April 1, 1998, the SEC charged Sekhri and others with insider trading. The U.S. Attorney's Office for the Southern District of New York later filed criminal charges against Sekhri for illegal insider trading. Sekhri remained a fugitive for more than a year until he was arrested in Australia and extradited to the United States. On March 14, 2000, he pled guilty to criminal charges of insider trading and was sentenced to 24 months in jail. Sekhri was deported to India after he had completed his criminal sentence.

In imposing the maximum civil penalty allowable, the Court observed that Sekhri "held one of the highest positions of trust and confidence at a major investment banking firm, and he betrayed that trust on repeated occasions."

The SEC's litigation in this case continues against the remaining defendants. For more information about this case, please see Litigation Release Nos. 15691 (April 1, 1998), 15965 (October 29, 1998), 16202 (June 30, 1999), 16208 (July 12, 1999), 16333 (October 14, 1999), 16472 (March 16, 2000), and 17632 (July 25, 2002).