The Securities and Exchange Commission on Monday accused three software engineers at cloud software provider Twilio and several of their friends and family members of participating in an insider trading scheme.
Between March and May 2020, as cloud tools gained popularity due to the increase in telecommuting, Twilio Lokesh Lagudu, Chotu Pulagam and Hari Sure engineers gained access to financial information from the company’s databases. Through a private chat group, they shared this information with others who then executed deals before Twilio announced the results for the first quarter in May 2020, according to a lawsuit filed in the U.S. District Court for the Northern District of California.
Twilio’s results have risen in the past and stocks have skyrocketed. Thanks to the scheme, the group generated more than $ 1 million in profits, the SEC said.
This is a topic that is attracting increasing attention from regulators. The SEC has proposed new rules on the sale of shares to executives and is reportedly investigating a sale by Tesla board member Kimball Musk. Meanwhile, U.S. lawmakers have discussed bills that would ban members of Congress from buying and selling shares.
The three Twilio engineers were on a team responsible for sending invoices to customers, and each had signed an agreement that would not provide non-public information in a way that could result in illegal trade. Twilio software helps companies communicate with customers.
He must have passed on information about his friend Dilip Kamuyula, and Pulagam gave details to his brother Chetan Pulagam. Lagudu provided information to his girlfriend Sai Nekalapudi and his friend Abhishek Dharmapurikar.
After receiving the information, Sure sent about $ 10,000 to Kamujula, who then bought the Twilio call options. Meanwhile, Nekalapudi and Chetan Pulagam sought permission to trade options from brokerage accounts they had not used in years, the complaint said.
“We claim that this insider trading circle has benefited from valuable revenue information related to the San Francisco technology company pandemic,” said Monique C. Winkler, acting regional director of the SEC’s regional office in San Francisco. in a press release. “We hold these alleged dump trucks and the types responsible for their role in the scheme.
Separately, the U.S. Attorney’s Office for the Northern District of California has filed criminal charges against Kamuula, accusing him of securities fraud in connection with his trade. The SEC’s allegations are civil in nature and require mostly monetary sanctions.
A Twilio spokesman could not confirm the employment status of Lagudu, Pulagam or Sure.
“The company is aware of the investigations conducted by the US Attorney’s Office and the Securities and Exchange Commission, and the allegations that were made today,” the spokesman said. The company cooperates fully with both agencies.
Twilio engineers are said to have communicated in a private chat group, exchanging messages in Telugu, a language mostly spoken in South India. Based on customer data, they said in the group that stocks will definitely rise after the results.
Lagudu revealed in the chat channel that he had “checked” an internal revenue database and found that “SMS and other expenses have increased this month” and that “email revenue has increased” in the same way, the SEC said in a statement. the complaint.
Lagudu told colleagues that some customers sent three times as many messages as they had before, noting that the group had seen one customer grow from tens of thousands of dollars in revenue in earlier months to nearly $ 2 million in March. .
Two days before Twilio released results for the first quarter, according to the complaint, Sure told the chat group that it looked like stocks would jump to $ 150 from about $ 110 at the time, prompting Chotu Pulagam to respond: “Millionaire.”
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