The Securities and Exchange Commission recently obtained final consent judgments against Dhirenkumar Patel and Ramesh Chitor, two defendants who pleaded guilty to parallel criminal charges of insider trading. The charges were in connection with the purchase of stocks, in 2021, based on tips from their friend Amit Bhardwaj, a former Lumentum, Inc. employee. These two final judgments bring this complex, multi-defendant insider trading case, filed in 2022, to a close.
According to the SEC’s complaint, Bhardwaj misappropriated material nonpublic information obtained in the course of his employment as Lumentum’s Chief Information Officer and shared it with several friends, including Patel and Chitor. Ahead of Lumentum’s announcement regarding its plan to acquire Coherent, Inc., Patel allegedly purchased Coherent securities based on the tip. Following the announcement in January 2021, Coherent stock increased by approximately 29 percent allegedly enabling Patel to realize at least $423,000 in unlawful profits. Later that year, Chitor purchased NeoPhotonics securities based on tip from Bhardwaj regarding Lumentum’s plan to acquire the company. Following the announcement, NeoPhotonics stock increased by approximately 38 percent allegedly allowing Chitor to generate at least $1.24 million from the unlawful trades.
In July 2022, the SEC charged Bhardwaj, Patel, Chitor and others with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. After being charged with parallel criminal charges, Patel and Chitor pleaded guilty and began cooperating with the Government in this case. Recently, on September 24, 2024, the SEC obtained final judgments against the two, in which they separately consented to the entry of judgment against them. They also agreed to be permanently enjoined from further securities violations and were barred from serving as an officer or director of a public company for a period of seven-and-a-half years. While Patel and Chitor were ordered to disgorge more than $423,000 and $1.24 million, respectively, and pay prejudgment interest, the court ruled that their obligations to pay these amounts were deemed satisfied by the entry of the orders of forfeiture against them in their criminal cases.
In March 2023, Bhardwaj pleaded guilty to 13 counts of a 14-count indictment, including securities fraud, wire fraud, and conspiracy for his role in the scheme. In December 2023, he was sentenced to 24 months in prison; barred from acting as an officer or director of a registered company; and agreed to forfeit more than $547,000 in proceeds derived from the illegal trades. He was also ordered to pay a fine of $975,000.
In January 2024, two other co-defendants – Srinivasa Kakkera and Abbas Saeedi – were sentenced in connection with the insider trading scheme. After pleading guilty to securities fraud and wire fraud conspiracy in September 2023, Kakkera was sentenced to 18 months in prison and ordered to forfeit nearly $2.5 million derived from the scheme, while Saeedi was sentenced to 5 months in prison and ordered to forfeit $700,000 in illegal profits. They were each additionally ordered to pay a $75,000 fine.
In June 2024, Bhardwaj, Kakkera and Saeedi reached separate settlements with the SEC in which they agreed, among other things, to be permanently enjoined from federal securities violations. Their obligations to disgorge illegal profits and pay prejudgment interest were also deemed satisfied by the forfeitures made in their criminal cases. In June 2024, the SEC also voluntarily dismissed all charges against relief defendants – All US Tacos, Janya Saeedi, Gauri Salwan, and The Kakkera Family Trust – who had unintentionally benefitted from the scheme.
SEC Litigation Release | SEC Complaint | Final Judgment – Patel| Final Judgment – Chitor | Notice of Voluntary Dismissal | Docket Entries – Final Judgments