A Pleasanton man was recently sentenced to prison time for his participation in a scheme to commit insider trading based on material, non-public information, according to the U.S. Department of Justice.
U.S. District Judge Gregory H. Woods ordered Srinivasa Kakkera, 48, to serve 18 months in prison on Jan. 3, according to a press release from the office of Damian Williams, the U.S. attorney for the Southern District of New York. According to a 2022 complaint filed by the U.S. Securities and Exchange Commission, Kakkera worked as the head of engineering and artificial intelligence at a publicly traded computer software company in San Jose and conspired with two other men in the scheme while also tipping off family and friends.
According to federal authorities, Kakkera will have to forfeit just under $2.5 million for the trading of information about impending corporate transactions by Lumentum Holdings Inc., a telecommunications equipment commercial company based in San Jose.
Kakkera was also sentenced alongside Abbas Saeedi, a 48-year-old man from Fremont who was also involved in the trading scheme. Saeedi was sentenced to five months and will have to forfeit just over $690,000.
“Srinivasa Kakkera and Abbas Saeedi traded on valuable material, non-public information about Lumentum’s planned acquisitions, knowing that their friend had stolen this information from his employer, Lumentum,” Williams stated in the press release. “Kakkera and Saeedi used their informational advantage to make millions in combined illegal gains in the stock market. But insider trading is not easy money: if you try to illegally profit from material, non-public information, there’s a price to be paid.”
The friend Williams was referring to was Amit Bhardwaj, a third co-defendant from San Ramon who was employed by Lumentum.
Bhardwaj was the one who provided the material, non-public information from the company, according to authorities. Bhardwaj was previously sentenced to 24 months in prison and was issued a fine of $975,000.
According to the indictment and the statements made in the public court proceedings, back in December 2020 Bhardwaj learned that Lumentum was considering the acquisition of Santa Clara-based Coherent, Inc., a industrial, communications, electronics and instrumentation manufacturer.
Bhardwaj purchased Coherent stock and call options before tipping off three of his associates, one of whom was Saeedi, according to the DOJ press release.
Then, around October 2021, Bhardwaj learned that Lumentum was engaged in confidential acquisition discussions with Neophotonics Corporation, another company based that manufactured and sold electronic devices. Lumentum ended up acquiring Neophotonics in November 2021, but not Coherent.
Bhardwaj provided information on the potential Neophotonics acquisition at the time to Kakkera and Saeedi who both traded in Neophotonics securities. Kakkera’s friends and family also purchased securities because of the information he learned.
As a result of the Neophotonics acquisition in 2021, the company’s stock price substantially increased and Kakkera along with Saeedi closed their positions in Neophotonics securities, which resulted in Kakkera making over $2,453,687.99 and Saeedi making $691,104.73, according to the DOJ.
However, the FBI soon interviewed them and they were all served with federal grand jury subpoenas in March 2022 and were later arrested. Bhardwaj, Kakkera and Saeedi then took steps to “obstruct the federal investigation of their conduct” by meeting in person on several occasions and discussing potential false stories to cover up their insider trading scheme, according to federal prosecutors.
The press release stated that they also created false documents to “buttress lies regarding payments that were, in reality, related to the insider trading scheme.”
