The head of a local broker-dealer and financial services provider yesterday praised the work of the Securities Commission of The Bahamas and its compliance department for reporting and helping the U.S. Securities and Exchange Commission (SEC) bring insider trading charges to a trio of persons earlier this week. He believes the move will send a clear message that The Bahamas is no safe haven for illicit activity. Swiss America Securities, Ltd. (SAS) President Guy Gentile yesterday told Guardian Business that the SEC's recent charges against former J.P. Morgan analyst Ashish Aggarwal and two of his associates for insider trading detected by SAS should serve as a warning to those attempting to exploit the country's financial services sector.
"The Bahamas is not the place to hide your criminal activity. It will be discovered, it will be reported, and it will be prosecuted," Gentile stated. On Monday, the SEC charged Aggarwal with illegally providing his close friend, Shahriyar Bolandian, with confidential information about clients involved in impending mergers and acquisitions of tech companies, including salesforce.com's acquisition of ExactTarget in 2013. According to the Complaint for Violations of the Federal Securities Laws filed in the U.S. District Court for the Central District of California, Western Division on Monday, the SEC stated that one of the brokerage accounts used by Bolandian was located offshore in The Bahamas at SAS. He opened and funded the account with his credit card a week before the ExactTarget deal was announced.
In essence, Bolandian opened and cashed out his SAS account between Friday and the following Monday, generating a sizable profit and raising eyebrows at SAS, which led the Bahamian firm to contact local and U.S. securities commissions. "We're the frontline for detecting and stopping criminal acts that affect the securities market. Insider trading is particularly very hard to detect because it doesn't involve market manipulation, so we have to develop other means to identify this activity. "Swiss America will not tolerate bad behavior and neither will The Bahamas. I'd like to thank the Securities Commission of The Bahamas, the Royal Bahamas Police Force, the United States Securities Commission, the FBI and especially my Chief Compliance Officer Philip Dorsett for properly handling the matter," said Gentile.
On May 23, 2013, Bolandian opened an account at SAS' Nassau branch and registered with the Securities Commission of The Bahamas. Three days later, Bolandian authorized SAS to charge $15,000 on his personal credit card in order to fund Bolandian's new offshore brokerage account. On May, 2013, Bolandian used the entirety of the $15,000 to purchase additional call options while the proposed merger between CRM and ExactTarget remained non-public information. ExactTarget's stock price jumped substantially following the public announcement of the merger on June 4, 2013, during which Bolandian sold all of his ExactTarget call options held in his SAS and additional accounts. According to the filing, the trades resulted in "illicit profits" of approximately $595,000, with over $317,000 for Bolandian, roughly $91,000 for Bolandian's father Farhad Bolandian and $178,000 in Sadigh's accounts.
Bolandian further tipped his associate Kevan Sadigh to trade on the confidential information, with the pair making more than $672,000 in profits from the insider trading. "We allege that Aggarwal, Bolandian and Sadigh misused an investment bank's confidential information for their personal benefit and victimized the bank, its clients and investors. "We will continue to proactively identify and combat serial insider trading schemes, particularly when it involves industry professionals," said Robert A. Cohen, acting co-chief of the SEC Enforcement Division Market Abuse Unit. The SEC's complaint seeks to force Aggarwal, Bolandian and Sadigh to pay "disgorgement of their ill-gotten gains" in addition to prejudgment interest and penalties, and permanent injunctions from future violations of these provisions of the federal securities laws.
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