Two friends accused of operating insider trading ring

A technology executive and his best friend, who was both a high school teacher and a sports bookie, have been charged with operating an insider trading ring that allegedly generated US$1.7 million in illicit profits.

The U.S. attorney for the Northern District of California filed securities fraud charges against Benjamin Wylam, a teacher and bookie, and his close friend, Nathaniel Brown, senior revenue manager at tech company, Infinera Corp., with securities fraud in connection with alleged insider trading.

It’s alleged that Brown tipped Wylam ahead of his company’s financial results being released, and that Wylam traded on that information.

A third man, Naveen Sood, pled guilty to one count of securities fraud for his involvement in the scheme.

Sood reportedly owed a US$100,000 gambling debt to Wylam. He allegedly traded on tips from Wylam to help pay off his debt and passed along an insider tip from another friend at a different tech firm, Fortinet.

The trio were also charged by the U.S. Securities and Exchange Commission (SEC) — along with three other men — accused of trading on the inside information.

“Using sophisticated data analysis, the SEC was able to uncover this insider trading ring and hold each of its participants accountable to ensure the integrity of our markets,” said Joseph Sansone, chief of the SEC enforcement division’s market abuse unit, in a release.

Sood and the other three respondents have all settled the SEC’s allegations, and agreed to pay over US$650,000 in penalties.

Wylam also consented to a permanent injunction with civil penalties to be decided later by the court. The SEC’s litigation against Brown is continuing.

The U.S. attorney is seeking US$999,000 in the information charging Wylam, alleging that represents the benefit he generated from his illegal trading activity.

Wylam and Brown are presumed innocent of the criminal charges against them.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.