The U.S. Securities and Exchange Commission on Monday charged three software engineers at cloud software vendor Twilio (NYSE:TWLO) and several of their friends and family members with involvement in an insider trading scheme.
Between March and May 2020, as cloud tools were gaining use due to the surge in remote work, Twilio engineers Lokesh Lagudu, Chotu Pulagam and Hari Sure accessed financial information from the company’s databases.
Through a private chat group, they shared that information with others, who then executed trades before Twilio announced first-quarter results in May 2020, according to the complaint filed in the U.S. District Court for California’s Northern District.
Twilio’s results soared past estimates and the stock skyrocketed. Due to the scheme, the group generated over $1 million in profits, the SEC said.
It’s a topic that’s gaining increased attention from regulators. The SEC has proposed new rules surrounding executives’ stock sales, and it reportedly investigated a sale by Tesla board member Kimbal Musk. Meanwhile, U.S lawmakers have discussed bills that would ban members of Congress from buying and selling stocks.
Sure passed information on the data to his friend Dileep Kamujula, and Pulagam gave details to his brother, Chetan Pulagam. Lagudu provided information to his girlfriend, Sai Nekkalapudi, and his friend, Abhishek Dharmapurikar.
After receiving the information, Sure wired around $10,000 to Kamujula, who then bought Twilio call options. Nekkalapudi and Chetan Pulagam, meanwhile, sought permission to trade options from brokerage accounts they had not used in years, the complaint said.
TWLO shares jumped seven dollars, or 4.4%, to begin Tuesday trading to $167.70.