A federal jury convicted Sivannarayana Barama, a former IT professional at multiple Silicon Valley technology firms, of four counts of securities fraud for using a publicly traded company’s confidential inside information about its financial performance to trade in the company’s securities.
United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp announced the guilty verdicts which followed a one-week trial before Chief United States District Judge Richard Seeborg, a December 23, 2022, press release from Hinds’ office said.
Barama and a co-defendant were charged with securities fraud and conspiracy to commit securities fraud by a superseding indictment in December 2019. The co-defendant pleaded guilty plea to related charges in 2019. Barama proceeded to jury trial, and the jury returned its verdicts against Barama on December 13, 2022.
Palo Alto Networks Inc. is a public company headquartered in Santa Clara, Calif., and listed on the NASDAQ exchange. According to the superseding indictment’s allegations, Barama, 48, of Fremont, Calif., participated in an insider trading scheme in which he learned inside information about the quarterly financial performance of Palo Alto Networks before that information was released to the public and then traded in that company’s stock while that information was still confidential.
According to evidence presented at trial, Barama formerly worked as a contractor at Palo Alto Networks. During that time he met an employee who worked in the company’s information technology department. From at least October 2016 through September 2017, the employee learned confidential inside information about the company’s quarterly revenue and financial performance through his employment, traded on that information, and also provided Barama with the information along with trading instructions. Barama used the confidential information and trading instructions to purchase Palo Alto Networks stock options.
Barama ultimately made profits of $7.3 million on his options trades based on confidential information obtained ahead of four different Palo Alto Networks earnings announcements, the press release said.
The jury convicted Barama of four counts of securities fraud in violation of 18 U.S.C. § 1348.
The jury acquitted Barama of one count of conspiracy to commit securities fraud in violation of 18 U.S.C. § 1349. Chief U.S. District Judge Seeborg has not yet set a sentencing hearing date for Barama who remains free on bond pending his sentencing hearing.
Barama and other traders and participants in the insider trading scheme were named in enforcement actions brought by the United States Securities and Exchange Commission in 2019.