U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23934 / September 13, 2017
Securities and Exchange Commission v. Mayank Gupta, et al., No. 17-civ-05274-SVK (N.D. Cal., filed September 12, 2017)
Former PricewaterhouseCoopers Auditor and Relative Charged with Insider Trading
The Securities and Exchange Commission announced that a former auditor has agreed to settle charges that he tipped his relative with inside information about a client on the verge of a merger.
The SEC’s complaint alleges that, through his audit work at PricewaterhouseCoopers LLP, Mayank Gupta learned that San Jose, Calif.-based Cavium was making imminent preparations to acquire Aliso Viejo, Calif.-based QLogic Corp. According to the SEC’s complaint, before the deal was announced to the public, Gupta called his cousin-in-law Pushpendra Agrawal, and told him that Cavium was going to acquire QLogic and that QLogic was a “sure thing.” Upon arriving at work, Agrawal bought 200 QLogic call options, based on Gupta’s tip. During his lunch break, Agrawal bought an additional 50 QLogic call options, again based on Gupta’s tip. After QLogic announced that it would be acquired by Cavium through a tender offer, QLogic’s stock rose by more than 9 percent, and Agrawal profited by more than $23,785 from the illegal trades.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, charges Gupta and Agrawal with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Without admitting or denying the allegations in the SEC’s complaint, Gupta agreed to pay a civil penalty of $23,785 and Agrawal agreed to pay $23,785 in disgorgement plus $964 in interest and a civil penalty of $11,892, for a total of $36,641. The amount of Agrawal’s penalty reflects his cooperation with the SEC in its investigation. Gupta and Agrawal also agreed to the entry of permanent injunctions against future violations of the charged provisions of the federal securities laws. The settlement is pending court approval.
The SEC’s investigation was conducted by Matthew Montgomery and supervised by Spencer Bendell of the Los Angeles office.