Commission Files Another Settled Insider Trading Case
Halting insider trading has long been a priority for the Commission. While the offense is not mentioned in the fraud provisions of the Securities Act or the Exchange Act, it is based on a breach of duty and has long been viewed as the kind of malfeasance that is contrary to statutes that were enacted to bring a new ethics to the marketplace. In the Matter of Umpathi Kakkera, Adm. Proc. File No. 3-22267 (Oct. 17, 2024) is one of the cases brought by the Commission for insider trading.
Respondent Umapathi Kakkera is employed as an information technology specialist at the New Jersey office of a Belgian manufacturer of chemicals.
On November 4, 2021, Lumentum Holdings Inc. announced that it had agreed to acquire NeoPhotonics Corporation. Defendant Umapathic Kakkera traded in the shares of NeoPhotonics prior to that announcement. At the time of the trades, Defendant had inside information about the transaction. That information had been misappropriated by Amit Bhardwaj, the Chief Information Security Officer of Lumentum.
Mr. Bhardwaj acquired the inside information about the acquisition through his work at Lumentum. During the weeks leading up to the Announcement, he tipped three friends. Those included Srinivasa Kakkera, Respondent’s brother. He tipped those individuals so they could trade in the securities prior to the deal announcement. Based on the information furnished to him, Umapathi Kakkera purchased NeoPhotonics call option contracts. Following the deal announcement he had over $200,0000 in profits from the trades. The Order alleges violations of Exchange Act Section 10(b) and Rule 10b-5.
Respondent resolved the proceedings. The Commission deemed it appropriate to enter a cease-and-desist order based on the Section and Rule cited in the Order. In addition, Respondent was ordered to pay disgorgement of $206,077.62, prejudgment interest of $30,717.92 and a penalty of $206,077.62. Previously, the Commission settled insider trading charges against Srinivasa Kakkera and Abbas Saeedi. SEC v. Bhardwaj, Civil Action No. 1:22-cv—6277 (June 13, 2024).