Amit Kanodia convicted of insider trading

Amit Kanodia of Indian origin from Brookline, Mass., has been convicted October 17 by a federal jury in Boston of conspiracy and securities fraud after tipping off two friends in connection with an insider trading scheme that netted more than $1 million in illegal profits.

Kanodia, 49, was convicted following a six-day jury trial of one count of conspiracy and 10 counts of securities fraud. Each count represents the purchase of Cooper Tire securities by co-conspirators Iftikar Ahmed and Steven Watson.  Kanodia was acquitted of eight additional counts of securities fraud related to other purchases made by Ahmed and Watson.

The conspiracy statute provides for a sentence of no greater than five years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain/loss, whichever is greater.

The securities fraud statute provides for a sentence of no greater than 20 years in prison, five years of supervised release and a fine of $5 million.

His sentencing is scheduled for Jan. 18. Meanwhile, Ahmed remains a fugitive from justice.  Watson has pleaded guilty and is set to be sentenced in November.

According to a press release from the U.S. Attorney for the District of Massachusetts, in the spring of 2013, Kanodia tipped off his two friends, Ahmed and Watson, about the contemplated acquisition of Cooper Tire & Rubber Company by India-based Apollo Tyre.   Kanodia learned about the possible acquisition from his wife who was the General Counsel of Apollo at the time.

In the months leading up to the public announcement of the acquisition, both Ahmed and Watson purchased shares and options in Cooper Tire which trades on the New York Stock Exchange. On the day of the announcement, Cooper Tire’s share price increased 41% and Ahmed and Watson began selling their interests in the company for a combined profit of more than $1 million.  Both Ahmed and Watson paid Kanodia a portion of their illegal profits.

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