We've already seen SEC insider trading cases alleging
husband betraying wife,
wife betraying husband,
boyfriend betraying girlfriend,
brother-in-law betraying brother-in-law, and even
divorcee betraying divorcee, but here's a new one: brother betraying sister.
Yesterday, the SEC filed a settled insider trading action against Sarath B. Gangavarapu alleging that he misappropriated inside information from his sister, whose husband was an executive officer at Covansys Corporation. The SEC claims that Gangavarapu purchased over 54,000 shares of Covansys stock at a cost of over $1.4 million based on that information during the nine days leading up to Covansys' public announcement that it would be acquired by Computer Sciences Corporation. The concept of "sibling betrayal" is a new one in SEC cases to my knowledge, but due to the typical love-hate relationship between siblings in general, I'm going to slot this case as
Betrayal Level: Low (”Someday We’ll Laugh About It”) on the “
Familial Betrayal Advisory System.”
The SEC alleges that in April 2007, Covansys was in discussions with CSC and another company about their interest in acquiring it. Gangavarapu allegedly spoke frequently with his sister during April 2007 and asked her questions about her husband's work activities. His sister allegedly told Gangavarapu that her husband was in meetings behind closed doors and working extra hours, and after learning from her husband that Covansys' board of directors would vote the next day on which acquisition offer to accept, told her brother that "by tomorrow, it's a relief, it will be over." The SEC says that Gangavarapu proceeded to trade based on this information, ultimately profiting more than $361,761.
Read the SEC's Litigation Release