Ex-Yahoo executive, Indian-American plead guilty in insider trading

WASHINGTON: A former Yahoo executive and an Indian-American hedge fund manager have pleaded guilty to insider trading charges that involved exchanging confidential information on a deal between Yahoo and Microsoft for personal gains.

The case comes close on the heels of another high profile insider trading trial that began yesterday in a New York court involving another Indian-American Rajat Gupta, former Goldman Sachs director.

The Securities and Exchange Commission (SEC) yesterday alleged that Robert W Kwok, who was then a Yahoo's senior director of business management, told Indian-American Reema D Shah in July 2009 that a deal between Yahoo and Microsoft would be announced soon.

Based on Kwok's illegal tip, Shah prompted the mutual funds she managed to buy more than 700,000 shares of Yahoo stock that were later sold for profits of approximately $ 389,000, SEC alleged.

The SEC further alleged that a year earlier, the roles were reversed.

Shah, 40, tipped Kwok with material non-public information about an impending acquisition announcement between two other companies.

Kwok traded in a personal account based on the confidential information for profits of $ 4,754.

Kwok and Shah, who live in California, have agreed to settle the SEC's charges.