| Sept 20
Sept 20 A former Akamai Technologies Inc
official agreed to pay over $145,000, and be banned
from serving as a public company officer or director, to settle
civil charges he provided illegal tips that were funneled to Raj
Rajaratnam, the hedge fund manager imprisoned for insider
The U.S. Securities and Exchange Commission said Kieran
Taylor, a former Akamai senior director of marketing, illegally
tipped lifelong family friend Danielle Chiesi, a hedge fund
manager at New Castle Funds, about the Internet content delivery
company's plan in July 2008 to lower its revenue forecast.
According to the SEC, Chiesi relayed what she learned to
Rajaratnam, telling the Galleon Group LLC manager that Akamai
was "going to guide down a lot," and also tipped Steven Fortuna,
managing partner of S2 Capital Management LP.
The SEC said Chiesi, Fortuna and Rajaratnam shorted hundreds
of thousands of Akamai shares, reaping about $9.9 million of
illegal profit after Akamai issued its forecast on July 30, 2008
and its stock fell 25.3 percent the next day.
Meanwhile, Taylor sold his 2,500 Akamai shares before the
decline, enabling the New York resident to avoid losses of
$20,635, the SEC said.
Short-sellers sell borrowed stock, hoping they can buy the
shares back later at a lower price and replenish their lenders.
"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 office.
Jack Cinquegrana, a lawyer for Taylor, did not immediately
respond to requests for comment.
Taylor, 45, agreed to pay a $120,635 fine, $20,635 of
disgorged profit and $4,190 of interest, and accept a five-year
officer and director ban. He did not admit or deny wrongdoing.
Rajaratnam is serving an 11-year prison term following his
2011 insider trading conviction, and was ordered to pay a record
$92.8 million penalty in a related SEC civil case.
Chiesi spent less than two years in federal custody after
pleading guilty in 2011 to conspiracy. Fortuna was sentenced in
February to two years probation after pleading guilty in 2009 to
securities fraud and cooperating with prosecutors.
More than 70 portfolio managers, analysts, traders and
others have been convicted or pleaded guilty in a sprawling
hedge fund insider trading probe unveiled in October 2009.
The case is SEC v. Taylor, U.S. District Court, Southern
District of New York, No. 13-06670.