Tag Archives: Insider Trading

Houston men settle with SEC over insider trading allegations

Two Houston-area men, Balajj Sundarraj of Sugar Land and David O’Brien of Houston, have agreed to pay fines and penalties to settle allegations by the SEC of insider trading.

Mr Sundarraj owns and operates a company that supplies directional drilling products. Mr  O’Brien is a purchasing manager in the oil and gas industry.

According to the SEC, Mr Sundarraj’s brother-in-law was an associate lawyer at a law firm engaged by Oracle to perform legal due diligence. The brother-in-law worked from his home in Sugar Land and took steps to make sure his work remained confidential.

In April 2016, the brother-in-law was on a conference call discussing Oracle’s proposed acquisition of Opower. Mr Sundarraj was in an adjacent room and overheard details. He then told Mr O’Brien about the call. So, after researching the company on library computers, they each purchased shares of Opower.

In late April, Mr Sundarraj bought 5,000 shares for $39,359, while Mr O’Brien bought 8,858 shares for $68,729.  On May 2, Oracle announced it would buy Opower. The same day, Sundarraj and O’Brien sold all their shares, realizing gains of $12,050 and $22,900 respectively.

Without admitting or denying the findings, Sundarraj agreed to pay disgorgement of $12,050, interest of $1,650 and a penalty of $34.950. O’Brien agreed to pay disgorgement of $22,900, interest of $3,137 and a penalty of $22,900.

SEC action – Sundarraj and O’Brien

Houston executive settles with SEC over insider trading claims

David Altom, of Magnolia, TX along with his friend Gabriel Graven of Edmond, Oklahoma, have settled with the SEC over insider trading claims.

The insider trading related to the December 2016 takeover of Oklahoma-based Seventy-Seven Energy Inc by Houston-based Patterson-UTI Energy. At the time, Mr Altom was the Senior Director of Health, Safety and the Environment at Seventy-Seven. He is now in a similar role at a subsidiary of Patterson.

Beginning in 2014, Mr Altom and Mr Graven became friends while neighbors in Oklahoma. In November 2016, Mr Altom was notified of Seventy-Seven’s pending takeover so that he could participate in the due diligence process.

5 days later, Mr Altom tipped off Mr Graven about the proposed deal in an effort to benefit his friend by offsetting losses Mr Graven had suffered while trading in Seventy Seven’s stock the year before. Mr Graven purchased 6,614 shares for a total of $164,159.

Unbeknownst to Mr Altom, Mr Graven also tipped off a relative of his, who was a trader. The relative bought 500 shares worth $12,875.

Within a month of the deal being announced Mr Graven sold all his shares, realizing a profit of $126,835. His trader relative also made a profit of $9,625.

As part of the settlement, Mr Altom has agreed to pay a civil penalty of $85,000. Mr Graven will pay a penalty of $136,460 and will also have to return the profits with interest.


SEC charges Richmond IT professional with Insider Trading

The SEC has charged Hamed Ettu, an IT professional living in Richmond, TX, with insider trading. Mr Ettu was a family friend of Damilare Sonoiki, a junior analyst at Goldman Sachs investment bank.

The US Attorney’s Office for the Eastern District of Pennsylvania has also filed criminal charges against Mr Ettu.

Back in August, the SEC charged Mr Sonoiki in a separate insider trading case with passing stock tips on 4 companies to NFL footballer, Mychal Kendricks who allegedly made $1.2 million from the investments in 2014. Mr Kendricks pleaded guilty in September and will be sentenced in January 2019.

Mr Kendricks was a 2nd round draft pick of the Philadelphia Eagles in 2012 and signed a new contract with the Eagles in 2015 that included $16 million guaranteed. At the time of his arrest he was playing for the Cleveland Browns. He was then cut by the Browns, signed by Seattle Seahawks, played one game and was then suspended by the NFL.

Mr Ettu’s gains were considerably smaller. He is alleged to have made $93,000 from the stock tips (two of the four that Mr Kendricks benefited from). Mr Sonoiki and Mr Ettu communicated in text messages in the Yoruba language.

Mr Sonoiki and Mr Ettu were family friends and the two had a history of joint business ventures including a house they owned together. In return for the stock tips, Mr Ettu allegedly forgave $30,000 which was Mr Sonoiki’s share of the repairs and maintenance.

Mr Ettu is a network analyst and according to LinkedIn has worked at Apache Corporation.

If found guilty in the criminal case, Mr Ettu could face 5 years in prison and a $250,000 fine. Mr Kendricks was facing a maximum sentence of 25 years but he is likely to receive a sentence of around 3 years.