Indian fund manager asked to pay $390K to settle charges

Manhattan's top federal prosecutor Preet Bharara had submitted in court that Reema Shah 'provided extensive substantial assistance to the government in the investigation and prosecution of other persons who committed federal offenses.'

An Indian portfolio manager been ordered to forfeit over $300,000 to settle charges filed by US Securities and Exchange Commission that she illegally tipped and traded on insider information concerning Yahoo's earnings.

Reema Shah, 42, was ordered by the US District Court in New York to pay disgorgement of $388,807 plus prejudgement interest of $1,296 and was permanently enjoined from any future violations of federal securities laws.

Shah had pleaded guilty in 2012 to securities fraud in a parallel civil insider trading case case.

Shah was at the time a portfolio manager at an asset management firm that managed billions of dollars in mutual funds and a hedge fund.

The SEC said that no penalty would be imposed in light of Shah's sentence in the parallel criminal case and her cooperation.

In the parallel criminal action, Shah was sentenced to two years of probation and ordered to forfeit $11,751 and pay a $500,000 criminal fine in October.

Shah has also consented to a order barring her from association with any investment adviser, broker, dealer, municipal securities dealer or transfer agent.

Manhattan's top federal prosecutor Preet Bharara had submitted in court that Shah ‘provided extensive substantial assistance to the government in the investigation and prosecution of other persons who committed federal offenses.’ 

According to court documents, from at least January 2008 through July 2009, Yahoo executive Robert Kwok provided confidential information concerning Yahoo's quarterly earnings and potential business transactions with other companies to Shah who then executed trades based on the inside information.

Shah, however, began cooperating with investigators after federal agents approached her in 2009.

Assistant US Attorney Benjamin Naftalis said Shah provided ‘important and useful’ information about ‘criminal activities’ at hedge fund giant SAC Capital that helped the government prosecute the Steven Cohen-led company.

In court papers, the government said that Shah decided to ‘cooperate promptly’ with the government and assisted ‘proactively’ in the government's covert investigation into insider trading from 2009 to 2010.

At the direction of the FBI, Shah secretly recorded ‘more than 700’ telephone calls and meetings with other investment professionals whom the government suspected as being involved in illegal insider-trading activities.

Shah recorded conversations with more than 80 people and many of these recordings ‘captured incriminating statements’ by investment professionals.       

She also identified about two dozen investment managers, research analysts and consultants whom she believed had engaged in insider trading.