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Three Twilio developers charged with insider trading
Crew alleged to have banked over $1m thanks to pandemic-induced usage bumps
Some might wish they could go back to the onset of the pandemic and invest in online communication tools. The problem for three software developers facing charges of insider trading is that they worked for one of these companies.
The US Securities and Exchange Commission (SEC) said on Monday that the three engineers were employed at San Francisco-based voice and text platform Twilio when they are alleged to have collectively generated over $1m of profit from illicit trades, along with four close contacts, or so the complaint alleges.
The three developers were named by the independent agency as Hari Sure, Lokesh Lagudu and Chotu Pulagram.
According to the SEC complaint, filed in the Northern District of California, the trio accessed various databases and deduced from pandemic-induced demand spikes for products that the share price would jump. The complaint [PDF] goes on to allege that database information reflected "surprisingly outsized customer usage numbers as compared to prior months and quarters," indicating Twilio revenue that "far exceeded prior periods."
"[The defendants] also shared with each other information from a Twilio revenue database showing how just one customer's account resulted in an increase to Twilio's revenue from tens of thousands of dollars in previous months to nearly two million dollars in March," the complaint adds.
The plaintiffs are alleged to have created a group chat where those chatting compared notes on product performance and prices, said the price would "rise for sure," discussed selling strategies, and cheered each other on with comments like "Miillionaireeeeee."
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The complaint alleges the trio then either tipped off or used the brokerage accounts of some family members and close friends to trade company options and stock before Twilio's earnings announcement on May 6, 2020.
The announcement included stellar news for investors: 57 percent year-on-year first quarter revenue growth equaling $364.9 million and surpassing analyst estimates. The stock price leapt from $122 per share prior to announcement to $170 the day after.
Of the family and close friends implicated in the affair, the US Attorney's Office for the Northern District of California confirmed criminal charges against Dileep Kamujula.
It is alleged the developers, as employees, agreed to keep such information confidential and were subject to a "black out policy," which prohibited trading for insiders during specific windows of time in the financial reporting cycle.
Monique C Winkler, acting regional director of the SEC's San Francisco Regional Office, said: "We allege that this insider trading ring took advantage of valuable revenue information related to the pandemic at a San Francisco tech company."
She added: "We are holding these alleged tippers and tippees accountable for their roles in the scheme."
Twilio told The Register: "The Company is aware of the investigations being conducted by the US Attorney's Office and the Securities and Exchange Commission and the charges that were filed,"
"The Company has been cooperating fully with both agencies," it added.
Last year Twilio founder and CEO Jeff Lawson described software developers to The Register as being underestimated. He said business executives fail to grasp their importance and dismiss them as "math geeks." Lawson advocated for software engineers to work together with the business side. ®