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The SEC on Thursday charged Greenwich resident Iftikar Ahmed, a general partner at Oak Investment Partners in Pickwick Plaza, and his friend Amit Kanodia of Brookline, Mass. The SEC said they illegally profited from insider information about the proposed acquisition of Cooper Tire and Rubber Co. by Apollo Tyres.?
“We allege that Kanodia gave inside information to two close friends who then kicked back a portion of their insider trading profits to a supposed charity that Kanodia controlled,” said Joseph G. Sansone, co-deputy chief of the SEC Enforcement Division’s Market Abuse Unit. “Despite Kanodia’s attempts at concealment, the SEC staff was able to uncover and unravel the scheme.”
In a complaint filed in U.S. District Court in Connecticut, the SEC filed fraud charges against Kanodia, an entrepreneur and private equity investor, and Ahmed, a general partner at a venture capital firm. They are charged with violating federal anti-fraud laws and a related SEC anti-fraud rule.
The SEC named Rakitfi Holdings, a company owned by Ahmed, and Lincoln Charitable Foundation, a supposed charity operated by Kanodia, as relief defendants. The SEC is seeking to have the defendants return their allegedly ill-gotten gains with interest and pay civil monetary penalties.
The SEC alleges that by April 2013, India-based Apollo Tyres was engaged in serious negotiations to acquire Cooper Tire, of Findlay, Ohio. Although the acquisition was never completed, the complaint alleges that Cooper Tire’s stock price jumped 41 percent when the acquisition was announced in June 2013.
The SEC alleges that Kanodia tipped Ahmed and another friend before the acquisition announcement after learning of the deal from his wife, then the general counsel at Apollo who was intimately involved in Apollo’s efforts to acquire Cooper Tire.
According to the SEC’s complaint, Kanodia shared the highly confidential information with Ahmed, who began buying significant amounts of Cooper Tire stock and options.
Once news of the deal was public, Ahmed immediately liquidated his Cooper Tire holdings, reaping more than $1.1 million, according to the complaint.
Ahmed later paid Kanodia a kickback by transferring $220,000 to Lincoln Charitable Foundation, a supposed charity that Kanodia controlled and used to mask the kickback, the complaint alleges.
A second close friend of Kanodia, identified in the complaint as Tippee 1, also profited by trading on the confidential information provided by Kanodia and paid a portion of his gains to Kanodia using the same supposed charity, the SEC’s complaint further alleges.
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