Three employees at a tech company, along with family and friends, billed a $1 million program
The Securities and Exchange Commission today announced insider trading charges against three software engineers employed by Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends who allegedly made insider trading for profit of more than $1 million ahead of the Company’s positive first quarter 2020 earnings announcement on May 6, 2020.
According to the SEC’s complaint, friends Hari Sure, Lokesh Lagudu and Chotu Pulagam were software developers at Twilio and had access to various databases relevant to the company’s revenue reporting. As claimed, around March 2020, they learned through the databases that Twilio’s customers had increased their use of the company’s products and services in response to public health measures amid the Covid-19 pandemic, and in a joint conversation concluded that Twilio’s stock price would “certainly go up.”
The SEC’s complaint alleges that Sure, Lagudu and Chotu Pulagam, despite having received a company policy prohibiting them from insider trading, knowingly tipped off or leaked the brokerage accounts of their family and close friends – Dileep Kamujula, Sai Nekkalapudi, Abhishek Dharmapurikar and Chetan – used Pulagam – to trade Twilio options and shares ahead of the May 6, 2020 earnings announcement while in possession of confidential client usage information. According to the complaint, the system generated more than $1 million in illegal trading profits.
“We allege that this insider trading ring exploited valuable pandemic-related revenue information at a San Francisco technology company,” said Monique C. Winkler, acting regional director for the SEC’s San Francisco regional office. “We hold these alleged Tippers and Tippees accountable for their role in the program.”
The SEC’s lawsuit, filed in the Northern District of California, alleges that each of the defendants violated the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Today the US Attorney for the Northern District of California announced criminal charges against Dileep Kamujula.
The SEC’s investigation, which is ongoing, was conducted by Erin Wilk and Elena Ro of the San Francisco Regional Office with assistance from Jan Jindra of the SEC’s Economic and Risk Analysis Division and John Rymas of the SEC’s Analysis and Market Abuse Detection Center. The case was handled by Jennifer J. Lee of the San Francisco Regional Office. The litigation is being conducted by Susan LaMarca, Ms. Wilk and Ms. Ro.
The SEC appreciates the support of the US Attorney for the Northern District of California, the FBI and the Financial Industry Regulatory Authority (FINRA).