U.S SEC Charges Former Palo Alto Networks IT Administrators And Others With Insider Trading

On Tuesday, December 17, United States authorities announced that they have

charged a former IT administrator and his four friends who were involved in a

years-long insider trading ring, in which they used confidential information about

a Silicon Valley cloud-computing company to reap millions for themselves.

The United States Securities and Exchange Commission charged a former

employee of 'cyber security' firm, Palo Alto Networks Inc. (PANW), Janardhan

Nellore, with allegedly using his high level of access to the database of the

company to obtain confidential information ahead of earnings. United States

authorities said in a court document that Nellore also led a group of friends with

names, Sivannarayana Barama, Ganapathi Kunadharaju, Saber Hussain and Prasad

Malempati in using that information to trade the securities of the company.

The Securities and Exchange Commission said that at the height of their scheme in

2017, the traders were alleged to have made over $7 million in illegal trading

profits; and that the activity allegedly began in 2015 and continued through to

2018. The insider trading members during communication in texts and emails,

referred to Palo Alto Networks as "baby" and also gave back profits to the ring

leader in cash transaction. This act of theirs was a strategy to evade detection and

being caught.

The director of the Securities and Exchange Commission, San Francisco Regional

Office, Erin E. Schneider said in a statement, "This case highlights our use of

enhanced data analysis tools to spot suspicious trading patterns and identify the

traders behind them,"

The Securities and Exchange commission revealed that Palo Alto Networks

terminated Nellore's employment earlier this year and he was arrested in May at

the airport after having purchased one-way tickets to India for himself and his

family.

A lawyer for Malempati said in an emailed statement: "I would suggest that the

fact that Mr. Nellore is in custody and has been since May and Mr. Malempati is

not in custody tells you a great deal with respect to who was aware that he was

relying on non-public inside information and who was not aware of it."

Palo Alto Networks Inc. (NYSE: PANW) is an American multinational cybersecurity

company with headquarters in Santa Clara, California. Its core products are a

platform that includes advanced firewalls and cloud-based offerings that extends

those firewalls to cover other aspects of security. The company was founded in

2005 and had a revenue of $2.27 billion in 2018.