Accused SAC Capital Tipster Arrested in Tech-Deal Probe
Sandeep Aggarwal, an analyst covering technology, is to be arraigned later Tuesday on charges of conspiracy to commit securities fraud and wire fraud at the U.S. District Court for the Northern District of California.
Federal Bureau of Investigation agents arrested Aggarwal, 40, in San Jose, Calif., on Monday.
Aggarwal, who worked in 2009 as a research analyst covering technology at the firm Collins Stewart in San Francisco, is to be arraigned Tuesday at the U.S. District Court for the Northern District of California. Lawyers for the 40-year-old defendant couldn't be reached for comment.
Aggarwal, who also faces a civil suit by the U.S. Securities and Exchange Commission, is accused of tipping former SAC portfolio manager Richard Lee, as well as an employee at another hedge fund, about a planned partnership between the Internet company, Yahoo (YHOO), and the computer company, Microsoft (MSFT).
The charges come less than a week after prosecutors in New York charged the $14 billion fund SAC Capital with securities fraud and wire fraud, claiming the hedge fund fostered a corrupt business culture in which portfolio managers were encouraged to use any means possible to find an "edge" in stock trading.
The criminal charges, along with an administrative proceeding accusing Cohen, SAC's founder, of failing to properly supervise his employees, are the result of a multiyear investigation into insider trading at the firm. So far, 10 former SAC employees have been charged or implicated for insider trading.
Lee, who worked as a portfolio manager at SAC between 2009 and 2013, pleaded guilty to charges related to insider trading and is cooperating with the government. The criminal complaint against Aggarwal said he spoke with a Microsoft employee on July 9, 2009, and learned of the potential partnership. A day later, according to the complaint, Aggarwal called Lee to discuss the partnership before it was announced.
"Like many others before him, Sandeep Aggarwal allegedly broke the law and provided material nonpublic information on a Microsoft-Yahoo deal," said FBI Assistant Director-in-Charge George Venizelos. "When questioned by his employer about the source of the information, he lied."
Aggarwal, an Indian citizen with permanent U.S. residency status, will make an initial appearance in federal court in California before facing the charges in New York, prosecutors said.