Silicon Valley Insider Trading Bust Nets Biology Teacher-Bookie
(Bloomberg) -- A Silicon Valley high school teacher who moonlighted as a sports bookmaker was tagged by federal authorities with another moniker: inside trader.
U.S. prosecutors want Benjamin Wylam, a 42-year-old biology teacher in Santa Clara, California, to pay back $999,000 of more than $1 million they claim he earned using inside information given to him by his best friend who was an executive at Infinera Corp., a small-cap digital optical network maker.
The Securities and Exchange Commission, which filed its own complaint Tuesday against Wylam and five other men, submitted to the court a declaration signed by Wylam that he has already agreed to plead guilty to criminal charges and consents to settling the SEC’s civil claims with penalties to be determined later. Wylam’s attorney, Matthew Diggs, declined to comment.
Wylam’s best friend, Nathaniel Brown, was a senior revenue manager at the Sunnyvale-based company until late 2017. Brown fed Wylam numbers from Infinera’s upcoming earning reports, according to the SEC.
Wylam, who the agency said was a bookmaker on the side, not only used the numbers to guide his own stock trades, but shared them with a friend who owed him more than $100,0000 in gambling debt, the SEC alleges.
The second friend shared the numbers with two others and together, the five men “reaped approximately $1.4 million in illicit profits and losses avoided from insider trading around several Infinera earnings announcements,” according to the regulator.
But it didn’t stop there.
One of the men worked for the cyber-security company Fortinet Inc., also based in Sunnyvale. He “learned that the company planned to make an unexpected, preliminary earnings announcement, and that the news would be negative,” the SEC says.
That illicit information allowed the Fortinet employee and three other men to make a total of $270,000, according to the SEC.
“Using sophisticated data analysis, the SEC was able to uncover this insider trading ring and hold each of its participants accountable to ensure the integrity of our markets,” Joseph Sansone, chief of the SEC Enforcement Division’s market abuse unit, said in a statement.
The SEC said that of the six men it accused of wrongdoing, four, including Brown, have agreed to pay civil penalties from $65,780 to $281,497.
The U.S. Attorney’s Office in San Francisco filed criminal charges against three of the men, including Wylam.
Infinera and Fortinet didn’t immediately respond after regular business hours to requests for comment.
Court dockets for the SEC and criminal cases didn’t provide any information on attorneys representing Brown.
The criminal case is USA v. Wylam, U.S. District Court, Northern District of California (San Francisco). The SEC case is U.S. Securities and Exchange Commission v. Brown, 21-cv-04594, U.S. District Court, Northern District of California (San Jose).
©2021 Bloomberg L.P.