When questioned by his employer on July 20, 2009, about tips he was providing to hedge funds, Aggarwal denied having any inside information and claimed his source was a person who had been retired from Microsoft for years, prosecutors alleged.
Lee pleaded guilty on July 23 to trading on information provided by a source at Yahoo and is cooperating with the U.S.
Aggarwal, who faces as long as 25 years in prison if convicted on both charges, is also being sued by the U.S. Securities and Exchange Commission.
He made an initial appearance yesterday before U.S. Magistrate Judge Nandor Vadas in federal court in San Francisco. The judge agreed to release Aggarwal on a $500,000 personal recognizance bond and ordered him to appear in federal court in New York on Aug. 2.
“He’s willingly returning to New York,” said Sam Braverman, a lawyer in New York who’s representing Aggarwal in both the SEC and the criminal cases.
Evidence against Aggarwal includes telephone records, documents from SAC Capital and a recorded telephone call between Aggarwal, Lee and a sales executive at Aggarwal’s firm on July 10, 2009, the U.S. said in the complaint. During the phone call, Aggarwal conveyed material nonpublic information about the Yahoo-Microsoft partnership, prosecutors said.
Lee, who managed a $1.25 billion portfolio at SAC and worked at the firm until March, focused on “special situations” including mergers and acquisitions, private-equity buyouts and corporate restructurings in publicly traded companies, Bharara’s office said.
He pleaded guilty to conspiracy and securities fraud, admitting that in 2009 he got illegal tips about Yahoo and 3Com Corp., generating more than $1.5 million in profits for the hedge fund, according to the SEC’s lawsuit.
The SEC filed an amended complaint in Lee’s case yesterday, adding Aggarwal as a defendant and saying that its investigation is continuing.
The criminal case is U.S. v. Aggarwal, 13-mj-01877; the SEC case is SEC v. Lee, 13-cv-05185; the SAC case is U.S. v. SAC Capital Advisors LP, 13-cr-00541, U.S. District Court, Southern District of New York (Manhattan).