SEC Charges Silicon Valley Exec With Insider-Trading

Oct 26 2012 | 2:13pm ET

The Securities and Exchange Commission has charged a former Silicon Valley executive with passing non-public information along to convicted hedge fund manager Raj Rajaratnam.

The SEC says Kris Chellam, a former senior executive with the tech firm Xilinx, tipped Rajaratnam in December 2006 with confidential details from internal company reports indicating that Xilinx would fall short of revenue projections it had previously made public.

When he passed the tip, Chellam had money invested with Galleon and was in talks with Rajaratnam about taking a job at the hedge fund, the SEC said. Galleon hired him in May 2007. As a result of the tip, Rajaratnam, a close friend of Chellam's, was able to short Xilinx stock, making an estimated $978,684 in illegal profits.

Chellam, who lives in Saratoga, Calif., has agreed to pay more than $1.75 million to settle the SEC’s charges. The settlement is subject to court approval.

“Chellam was entrusted with sensitive company information that he divulged to Rajaratnam knowing full well that Rajaratnam would trade on it,” said Sanjay Wadhwa, associate director of the SEC’s New York regional office and deputy chief of the enforcement division’s market abuse unit. “Corporate executives who exploit company confidences for personal gain will ultimately be held accountable for their illegal acts.”

As part of the proposed final judgement, Chellam will also be barred for five years from serving as an officer or director of a public company, and permanently enjoined from future violations of these provisions of the federal securities laws.

Chellam neither admits nor denies the charges.

The charge against Chellam brings to 32 the number of defendants in the SEC's Galleon-related enforcement actions and comes just as Rajat Gupta, the former head of consulting giant McKinsey & Co., was sentenced to two years in prison for passing tips to Rajaratnam. 


In Depth

Fitch Says Alternative Asset Managers 'Stable' Despite Dry Powder

Nov 20 2014 | 9:30am ET

Ratings agency Fitch says the outlook for seven publicly traded alternative asset...

Lifestyle

Cohen Buys $101 Million Sculpture

Nov 12 2014 | 9:17am ET

Steven Cohen was the sole bidder for a rare Alberto Giacometti sculpture at Sotheby...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.