June 7, 2022

SEC announces final judgments against California couple charged with insider trading

On June 1, 2022, the US Securities and Exchange Commission announced that final judgments had been entered against Mohammed “Mo” Pithapurwala and his wife Alifiya Kutiyanawalla in the US District Court for the Central District of California, based on insider trading charges alleging unlawful securities trades involving Snap, Inc., a camera and social media company. ahead of positive earnings announcement in 2018.  

According to the complaint, Pithapurwala, a lead engineer for Snap during the relevant time period, had access to material non-public information concerning Snap’s fourth quarter and year-end 2017 financial results.  While Pithapurwala was prohibited from trading in Snap securities during a pre-established blackout period, and from trading in Snap options at any time, he allegedly asked his sister-in-law, then residing in India, to purchase Snap options in exchange for a portion of the profits.  The SEC further alleged that, in order to conceal their role in the trades, Pithapurwala and Kutiyanawalla transferred $20,000 to the sister-in-law through intermediaries, breaking the sum into multiple transfers over the course of a week.  According to the complaint, on February 5 and 6 of 2018, the sister-in-law purchased $24,000 of short-date, out-of-the-money call options based on Pitapurwala’s tip, just before Snap announced its positive earnings results after the markets closed on February 6, 2018.  The options were sold in the following days, resulting in profits of more than $261,000 — a 1,088 percent return on the original investment.

In its complaint, the SEC charged Pathapurwala and Alifiya with violating section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and with aiding and abetting the anti-fraud violations.  Without admitting or denying the allegations in the complaint, Pithapurwala and Alifiya consented to the entry of judgment permanently enjoining them from further violations of the anti-fraud provisions.  Pitapurwala and Kutiyanawalla also agreed to pay civil penalties of $523,031 and $75,000, respectively.

SEC Press Release | SEC Complaint | Final Judgment – Pithapurwala | Final Judgment – Kutiyanawalla