Prosecutors Seek $999,000 From Bookmaker-Teacher for Alleged Insider Trading

  • Benjamin Wylam stands accused of using confidential insider information for personal gain
  • If convicted, he and his two alleged accomplices are looking at 25-year prison sentences
  • The SEC filed a parallel insider trading charge against Wynam and five others
  • It claims the six-strong ring “generated nearly $1.7m in illegal profits and losses avoided”
  • Wylam allegedly tipped a six-figure gambling debtor, Sood, with inside information
  • The commission said four of the accused have agreed to pay civil penalties of varying amounts
Notes on insider trading in a book
US prosecutors are seeking almost a million dollars from a California teacher who doubled as a sports bookmaker for his role in an illegal insider trading ring. [Image: Shutterstock.com]

Wylam accused of having confidential earnings info

US prosecutors are seeking $999,000 from a Silicon Valley biology teacher moonlighting as a sports bookmaker who allegedly earned over $1m through illegal insider trading.

The U.S. Attorney’s Office for the Northern District of California (USAO NDCA) on June 15 charged Benjamin Wylam, 42, of San Jose, California with one count of securities fraud. According to a Department of Justice news release, the charge is in relation to “illegal use of insider information” obtained from California-based digital optical network company Infinera Corporation. 

one count apiece of securities fraud

Two of Wylam’s alleged accomplices, Nathaniel Brown and Naveen Sood, also stand charged with one count apiece of securities fraud.

Criminal information filed by the DOJ alleges that, from April 2016 to November 2017, Wylam received confidential information from another individual about Infinera’s financial performance and projections. Wylam allegedly used the information for personal gain “while executing securities transactions in Infinera stock.”

The DOJ is seeking a “money judgment of $999,000” under the allegation that this total makes up or comes from earnings that Wylam obtained by illegal means.

Brown, Wylam, and Sood are scheduled to appear separately before a federal court on June 16, June 23, and September 8 respectively.

According to San Jose Inside, if convicted, the three men are looking at 25 years in jail and the “greater of either $250,000 or twice the gross gain made from the offense.”

SEC files related charge

In parallel proceedings on June 15, the Securities and Exchange Commission (SEC) accused Wylam of trading on the “confidential earnings information” of two technology companies based in the state. The businesses were Infinera and another California-based entity, cybersecurity firm Fortinet Inc.

The SEC shared news via Twitter of the charge against six men named in the alleged insider trading ring, which includes Wylam:

It claimed the six-strong ring “generated nearly $1.7m in illegal profits and losses avoided.”

Tip-trading free-for-all

The SEC published details of its complaint in an official news release on Tuesday. According to the filing, Brown – a revenue recognition manager for Infinera – “repeatedly tipped Infinera’s unannounced quarterly earnings and financial performance to his best friend [Wylam]” from April 2016 to November 2017.

racked up a “six-figure gambling debt” with the biology-teaching bookmaker

The SEC alleges that Wylam traded on his fellow San Jose friend’s information. Enter Sood, who racked up a “six-figure gambling debt” with the biology-teaching bookmaker. The complaint also states that Wylam tipped Sood, who traded on the information and subsequently tipped three of his friends, Marcus Bannon, Matthew Rauch, and Naresh Ramaiya, to do the same.

The SEC charged Bannon, Brown, Rauch, Sood, Ramaiya, and Wylam with violating “Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.” The chief of the SEC enforcement division’s market abuse unit, Joseph Sansone, said the SEC identified the insider trading ring by using “sophisticated data analysis.”

Four agree to pay civil penalties

The SEC has reportedly submitted a declaration to the court, signed by Wylam, agreeing to “plead guilty to criminal charges and […] to settling the SEC’s civil claims with penalties to be determined later.”

In its Tuesday news release, the commission said that four of the accused ring members have agreed to pay civil penalties. Bannon’s agreed penalty is the highest at $281,497, with Ramaiya’s being the lowest at $65,780.

In one of the most famous recent cases of insider trading, former US President Donald Trump’s final pardons and commutations before he left office included Las Vegas professional sports bettor William “Billy” Walters. In 2017, a federal judge convicted Walters of insider trading and sentenced him to five years in jail plus a $10m fine. Trump’s commutation cleared Walters of his remaining term.