Dileep Kumar Reddy Kamujula Charged with Securities Fraud
March 28, 2022 - Fremont, CA Indian, Dileep Kumar Reddy Kamujula (35) is charged today by a federal grand jury with insider trading securities fraud scheme related to San Francisco based Cloud Communications company Twilio, Inc.
Dileep Kumar Reddy Kamujula allegedly engaged in illegal securities trading based on inside information obtained from an employee of Twilio, Inc. identified by today's indictment as "Insider One"
According to the indictment unsealed today:
...as part of Insider One’s employment, the employee had regular access to a financial records system used by Twilio to monitor and account for customer sales. Insider One allegedly accessed confidential information concerning Twilio's financial results before those results were made public and passed on the information to Kamujula.
....beginning April of 2020, Insider One provided Kamujula with confidential nonpublic information regarding Twilio's financial results before those results were publicly disclosed. Around this time, Twilio accounting employees were in the process of determining the financial results of the company during that quarter, including the preparation of the SEC Form 10-Q that would be filed with the SEC and contain the financial reports for the quarter. The indictment alleges that between April 9, 2020, and May 6, 2020, Kamujula purchased approximately 257 call options for a total cost of approximately $133,333. Then, on May 6, 2020, Twilio announced its quarterly earnings, and in that press release Twilio reported earnings of $0.06 per share, a profit that exceeded the Wall Street analyst consensus estimate of earnings. On May 7, 2020, the day after the financial results were reported, Twilio's stock price increased by nearly 40 percent. The indictment alleges that after the announcement, on or about May 7 and May 8, 2020, Kamujula sold all 257 Twilio call options he had acquired in the preceding four weeks for a total profit of approximately $961,662.
Charges and Potential PenaltyThe charges against Dileep Kumar Reddy Kamujula include two counts and a forfeiture allegation:
- First Count - Violation of 18 U.S.C. §§ 1348
- Second Count - Violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. §§ 240, 10b-5, and 240.10b5-1 (also referred to as Section 10(b) of the Securities Exchange Act of 1933 and Rule 10b-5 thereunder)
- 25 years in prison and a $250,000 fine on first count
- 20 years in prison and a $5 million fine on second count
The next court appearance of Fremont, CA Indian Dileep Kumar Reddy Kamujula is scheduled for April 22, 2022.