On September 13, 2017, the Securities and Exchange Commission announced that a former auditor had agreed to settle charges that he provided his relative with insider information about a client before a merger. The SEC alleges that Mayank Gupta learned about Cavium making preparations to acquire QLogic Corp. through his audit work with PricewaterhouseCoopers LLC.
The SEC accused Gupta of calling his cousin-in-law, Pushpendra Agrawal, before the merger and telling him that it was a “sure thing”. After he arrived at work, Agrawal purchased 200 QLogic call options based on the information provided by Gupta. During his lunch break, Agrawal purchased an additional 50 QLogic call options. After QLogic announced that it would be acquired by Cavium, QLogic’s stock climbed by more than 9%.
Agrawal profited more than $23,000 from the illegal trade. Gupta has agreed to pay a civil penalty of $23,785. Agrawal has agreed to pay $23,785 in disgorgement, as well as $964 in interest and a civil penalty of $11,892. The men did so without admitting or denying their guilt.