A former executive at Massachusetts-based technology firm Akamai
Technologies Inc. (AKAM) was charged on Friday by the U.S.
Securities and Exchange Commission for being involved in an insider
trading scheme operated by Galleon Management hedge fund founder
Raj Rajaratnam.
The SEC alleges that Kieran Taylor, who was the senior director
of marketing for Akamai, illegally tipped New Castle Funds
portfolio manager Danielle Chiesi with confidential information
about the company's plans to lower its revenue guidance for
2008.
Mr. Taylor--who couldn't immediately be reached for comment--has
agreed to settle the SEC's charges by paying more than $145,000 and
has been barred from serving as an officer or director of a public
company. The settlement is subject to court approval. Mr. Taylor
didn't admit or deny the charges.
Ms. Chiesi--who prompted New Castle to short sell Akamai
stock--in turn tipped Mr. Rajaratnam with the nonpublic
information. She also provided the information to Steven Fortuna of
the hedge fund advisory firm S2 Capital.
The SEC alleges Ms. Chiesi, along with Messrs. Rajaratnam, and
Fortuna, collectively shorted hundreds of thousands of shares of
Akamai stock based on the nonpublic information illegally tipped by
Taylor and that their hedge funds reaped about $10 million in
illicit profits.
The agency also alleges Mr. Taylor traded on the nonpublic
information by selling 2,500 shares of Akamai stock he held in a
personal brokerage account to avoid losses of $20,635.
"Taylor's willing misuse of information about Akamai's financial
situation otherwise unknown to the rest of the investing public
made him just another cog in the sprawling Rajaratnam insider
trading machine," said Sanjay Wadhwa, senior associate director for
enforcement in the SEC's New York regional office, in prepared
remarks.
Mr. Rajaratnam in 2011 was sentenced to 11 years in prison, the
longest term ever imposed in an insider-trading case.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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