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Auditor charged with insider trading on client’s nonpublic information

Lam Research
Semiconductors   Lam Research and Milpitas

The Securities and Exchange Commission (SEC) announced that an auditor based in the Silicon Valley has agreed to settle charges that he traded on inside information about a client on the verge of a merger.


The SEC’s order finds that through his work at an independent audit firm, Nima Hedayati learned that Fremont, Calif.-based Lam Research Corporation was making preparations to acquire Milpitas, Calif.-based KLA-Tencor Corporation.

The two companies manufacture equipment used in the creation of semiconductors.

According to the SEC’s order, Hedayati proceeded to purchase out-of-the money call options in KLA common stock in his brokerage account as well as his fiancée’s brokerage account, and he also encouraged his mother to purchase KLA common stock.

After merger plans were publicly announced, KLA’s stock price increased nearly 20 percent, and Hedayati and his mother collectively profited by more than $43,000 from the illegal trades. Hedayati’s employer terminated him when it discovered his misconduct.

Without admitting or denying the SEC’s findings, Hedayati agreed to pay disgorgement of $43,027.59 plus $1,269.70 in interest and a $43,027.59 penalty for a total of more than $87,000.

Hedayati agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies.

The SEC’s order permits him to apply for reinstatement after five years.


 

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