SEC Charges Four in Insider Trading Case -- 2nd Update

By Dow Jones Business News, 
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By Maria Armental

Four northern California residents were charged with making more than $12 million through insider trading in Ross Stores Inc. stock options based on privileged information, the U.S. Securities and Exchange Commission said Friday.

The complaint, filed in federal court in San Francisco, alleges Saleem Khan was routinely leaked monthly sales by his friend, Roshanlal Chaganlal, who at the time headed the retailer's finance department, and used that information to trade under his brokerage account, and accounts belonging to his brother-in-law and an acquaintance.

The trading resulted in collective profits of more than $12 million, the SEC said.

Mr. Kahn, who is appealing an unrelated conviction on criminal bank fraud charges, also tipped off colleagues Ranjan Mendonsa and Ammar Akbari, according to the complaint.

Reached by phone, Mr. Khan's lawyer disputed the SEC's claims, saying his client "has a history of hundreds of short-term trades of Ross."

"If he was trading on insider information, hundreds of those would not be losing trades," said his lawyer, Chris Cannon. "I think the SEC's assumes facts that aren't evidence."

Mr. Cannon declined to comment on specifics, saying he hasn't yet reviewed the complaint in detail.

Mr. Akbari couldn't be immediately reached for comment. A woman who answered Mr. Mendonsa's home telephone said he had no comment.

A spokeswoman for Ross said the company had been cooperating with the SEC and terminated Mr. Chaganlal in December 2012. She declined to comment further, citing the continuing investigation.

The trades in question happened between August 2009 and December 2012, when Mr. Chaganlal was terminated, the SEC said.

The SEC alleges that Mr. Chaganlal gave Mr. Khan $17,000 as part of the scheme using the brother-in-law's account and charges that Mr. Chaganlal and Mr. Khan tried to cover up the exchange by using two cashier's checks for $8,500 bought under the name of Mr. Chaganlal's wife, who goes by a different surname.

In all, Mr. Khan is alleged to have made $5.4 million in profits in his account, and $6 million in his brother-in- law's account. His work supervisor, Mr. Mendonsa, is alleged to have made about $800,000 and Mr. Akbari about $2,000.

Mr. Khan's brother-in-law, Shadid Khan, and the acquaintance, Michael Koza, have agreed to settle the matter by paying the court profits remaining in their accounts, $240,741 and $31,713, respectively.

Separately, the SEC complaint alleges Mr. Khan made some $450,000 ahead of Oracle Corp.'s 2012 acquisition of Taleo Corp. by buying a large number of shares six days before the merger was announced based on privileged information he received from an insider he knew at Oracle. Mr. Khan had never traded in Taleo securities before, according to the SEC.

Write to Maria Armental at maria.armental@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


  (END) Dow Jones Newswires
  06-13-141940ET
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