The SEC charged an IT contractor and two of his family members with insider trading.
In a Complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleged that Rajeshwar R. Gannamaneni, a former IT contractor at an investment bank in Singapore, abused his position of trust as a consultant and was able to access highly confidential information concerning over 40 mergers, acquisitions, tender offers and other corporate events of the bank's clients. The SEC claimed that Mr. Gannamaneni illegally traded on that information and/or shared it with two family members, who also allegedly traded on the information. According to the SEC, the three collectively earned around $600,000 in profits.
The SEC obtained a court order freezing assets in three U.S. brokerage accounts and one bank account connected to the trading. The SEC is seeking disgorgement of allegedly ill-gotten gains, pre-judgment interest and penalties, as well as injunctive relief.
Commentary / Steven Lofchie
Even more than investment bankers, IT professionals in a firm may have access to inside information - and if they do, it is very likely about numerous companies. Accordingly, financial institutions should give consideration to limiting that access, bearing in mind that it may be a difficult task.
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