Sept. 20 (Bloomberg) -- A former Akamai Technologies Inc. executive agreed to pay more than $145,000 to settle a Securities and Exchange Commission lawsuit accusing him of trading on inside information and passing tips used by convicted Galleon Group LLC co-founder Raj Rajaratnam.
The SEC today sued Kieran Taylor, a former senior marketing director at Cambridge, Massachusetts-based Akamai, in federal court in Manhattan. The agency accused Taylor, who hasn’t been charged with a crime, of trading on secret information about Akamai earnings and passing illegal tips that were shared with others including Rajaratnam, who made $5.1 million in illegal profit from them.
Taylor, without admitting or denying the allegations, agreed to be barred from serving as an officer or director of a public company for five years, the SEC said in a statement.
The SEC claims that in July 2008 Taylor told Danielle Chiesi, a friend who was a New Castle Funds LLC analyst, that the company was expecting less revenue in 2008 than it had predicted publicly. Akamai helps customers deliver content over the Internet faster.
Chiesi then passed the information to hedge fund managers, including Rajaratnam, who used it to short Akamai stock and make a total of $10 million in illicit profit. Taylor sold his own shares, avoiding $20,000 in losses, according to the SEC.
In a wiretapped phone call introduced in Rajaratnam’s 2011 criminal insider trading trial, Chiesi told Rajaratnam that she played Taylor “like a finely tuned piano” to get the information. Chiesi also passed the Akamai tip to Steven Fortuna, the co-founder and former managing director at S2 Capital in Boston, who used it to make $2.4 million, according to the SEC complaint.
Jack Cinquegrana, a lawyer for Taylor, didn’t immediately return a voice-mail message seeking comment on the case.
Rajaratnam was convicted of directing the biggest hedge fund insider trading scheme in U.S. history. He is serving an 11-year term at the Federal Medical Center Devens in Ayers, Massachusetts. Chiesi, who pleaded guilty to securities fraud, was released in July after serving a 2 1/2-year sentence. Fortuna cooperated with prosecutors and was sentenced to probation.
The SEC previously sued Rajaratnam’s younger brother, Rengan Rajaratnam, who the agency claims also traded on the Akamai tip after getting it from his brother. Rengan Rajaratnam also faces criminal insider trading charges. He has pleaded not guilty.
The case is Securities and Exchange Commission v. Taylor, 13-cv-06670, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in Manhattan federal court at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org