On February 11, 2022, the US Securities and Exchange Commission announced that final consent judgments were entered against Nathaniel Brown and Benjamin Wylam, the final two members of a six-member illegal securities trading ring that generated illegal profits and avoided losses totaling nearly $1.7 million. The SEC accused members of the trading ring of placing unlawful trades based on quarterly earnings information obtained from two Silicon Valley-based technology companies between 2016 and 2017.
According to the complaint filed by the SEC on June 15 2021, between April 2016 and November 2017, Brown shared confidential quarterly earnings and financial performance results for Infinera Corporation, a networking solutions company, on multiple occasions with this best friend Wylam – information that Brown obtained while working for Infinera as a senior revenue manager. The SEC accused Wylam of trading in Infinera securities based on the material nonpublic information and then sharing the information with his friend Naveen Sood to whom he owed a six-figure gambling debt. Sood allegedly traded in Infinera securities based on Wylam’s tips and also shared the tips with three friends, Marcus Bannon, Matthew Rauch and Naresh Ramaiya who also placed unlawful trades. The SEC also alleges that in October 2016, Bannon, who was an account manager with cybersecurity company Fortinet at the time, shared Fortinet’s preliminary earnings information with Sood who not only used it to trade in Fortinet securities, but also shared the tip with Wylam and Ramaiya who also placed illegal trades based on the information.
On February 7, 2022, Brown consented to the entry of a final judgment against him, agreeing to be permanently restrained and enjoined from violating Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. After pleading guilty in 2021 to one count of securities fraud in a parallel criminal case, Brown was sentenced to 22 months in prison and ordered to forfeit $30,000. Based on this conviction, in January 2022, the SEC ordered that Brown was suspended from appearing or practicing before the Commission.
Wylam, who had consented in June 2021 to a permanent injunction with civil penalties that would have been decided by the court at a later date, ultimately agreed on February 7, 2022 to the entry of final judgment, which resolved all claims against him and permanently enjoined him from further securities violations. After pleading guilty to parallel criminal charges in 2021, Wylam was sentenced to 366 days in prison and ordered to forfeit $999,000.
The SEC entered into final judgments with the remaining 4 defendants – Sood, Bannon, Rauch and Ramaiya – in June of 2021.