August 14, 2019

Corporate development manager and friend charged with insider trading

On August 12, 2019, the Securities and Exchange Commission charged two men with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, for trading on inside information in connection with the acquisition of Kapstone Paper and Packaging Corporation by WestRock Corporation.  According to the SEC’s complaint, Harsh Nahata used information acquired in the course of preparing a valuation analysis of Kapstone in his work as manager in the corporate development group of WestRock, to purchase shares of Kapstone, and also tipped his friend Ajay S. Bhandari, who also traded in KapStone stock.  The SEC alleges that Nahata and Bhandari sold the KapStone shares immediately after the acquisition was announced, thereby realizing profits of $38,000 and $22,000 respectively.

Bhandari has agreed to a consent order enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and ordering him to pay $46,085 in disgorgement and penalties.

SEC litigation release | SEC complaint