According to evidence presented at trial, Barama formerly worked as a contractor at Palo Alto Networks. During that time he met an employee who worked in the company’s information technology department. From at least October 2016 through September 2017, the employee learned confidential inside information about the company’s quarterly revenue and financial performance through his employment.
Trial evidence demonstrated that the Palo Alto Networks employee traded on that confidential information himself in nominee accounts and also provided Barama with the information along with trading instructions. Barama used the confidential information and trading instructions to purchase Palo Alto Networks stock options. Once the company publicly announced its earnings for a prior quarter, the stock price reacted to the public disclosure and Barama’s earlier option trades promptly became highly profitable. Barama’s trades based on confidential inside information at times resulted in profits of more than five times the amount he invested. Barama ultimately made profits of $7.3 million on his options trades based on confidential information obtained ahead of four different Palo Alto Networks earnings announcements.
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