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Friends, family and federal charges

On Behalf of | May 19, 2022 | Securities Litigation

Nearly everyone wants to work for a successful company. You usually want to share the excitement of business achievements with your family and friends when you do.

However, you must consider whether the information you provide falls within legal limits or teeters on the precipice of federal fraud. How you receive data also matters.

Cloud computing and external communication

After a two-year-long investigation into over $1 million in illicit profits, three software engineers face charges of insider trading. The Securities and Exchange Commission (SEC) reports that the programmers, employed by Twilio, Inc., informed friends and family members to purchase stock before the company’s 2020 first-quarter earnings announcement.

Allegations suggest that the platform’s relevance increased as many businesses shifted to remote working arrangements. This response to the pandemic made digital communication necessary.

Access to internal databases allegedly led engineers to believe profits would increase. The tips they shared, in return, provided an unfair advantage in the market.

Private information traded publicly

Reports suggest that after Twilio employees leaked information, a series of unlawful events followed:

  • In April 2020, one individual purchased 257 Twilio call options for slightly more than $133,000.
  • Twilio released reports of a $0.06 per share increase on May 6, 2020.
  • On May 7, 2020, Twilio’s stock price rose nearly 40%.

The individual who’d invested money based on tips from company employees allegedly sold their options for an approximate $962,000 personal profit.

Profiting from policy violations

The standing charges include securities and commodities fraud as well as manipulative and deceptive devices. Civil charges of insider trading are also pending.

An “insider” not be directly involved with a company. As with the Twilio case, you should never seek personal gain from private corporate information.