Schools

Securities litigation slows Sangeeth Peruri LASD election

Man in suit gets spattered by passing car
Written by lalahpolitico

Once you run for elected office – even  a local non-partisan office like school board – your right to privacy declines. So here  is a letter from Bill Balson which airs Sangeeth Peruri’s unlucky run-in with a skirmish in the SEC’s ongoing war on insider-trading —  with the Doug Whitman case. I have combed through the news sources,  and Mr. Balson’s account seems fair to me. I now know more about “expert networks” and the SEC and FBI than I ever wanted to know.

[A week after first publishing Mr. Balson’s letter below, I wrote a follow-on article explaining the ins and outs of the Doug Whitman insider trading case.]  [[March 15, 2016 Update: Today I want the reader to know the legal approach used in these cases by the “overzealous” prosecutor – Preet Bharra – has been discredited.  See NYT.  See Fortune. Bottom line… according to those two links: If  your aunt who works for XYZ Co. investor relations happens to mention something about XYZ but expects/gets nothing in return, and you, her niece,  trade profitably on the info, neither of you will go to jail for insider trading. ]]

Sangeeth Peruri LASD election

Background:

About three weeks ago Lalahpolitico received a thick anonymous packet in the mail containing a print out of Sangeeth Peruri’s FINRA report of “employment termination” from his hedge-fund.  Confident that the Town Crier was also receiving a packet and would look into it, I googled it briefly and put the matter aside.  But the Town Crier has been silent.

The weekend someone anonymously dropped a copy of this Bill Balson letter in my mailbox.  I decided I should do more thorough google research on the local high tech insider trading cases (covered by WSJ, Barrons, Bloomberg and many others)  to verify what the author – who has greater financial industry knowledge than I do –  claimed in his letter about Peruri.  When I was satisfied as to it’s accuracy and fairness, I looked up Mr. Balson’s google info and  contact info and phoned him.  He is a Stanford Economic Engineering Systems grad and has investments with Ameriprise, the owner of  Peruri’s ex-employer – Columbia Capital.

In our phone call, Mr. Balson related that about 3 weeks ago Liz and Paul Nyberg of the Town Crier invited him to meet with Peruri, Peruri’s campaign treasurer and Town Crier staff to discuss Balson’s letter and the FINRA filing.  Mr. Balson said he posed 20 questions to Mr. Peruri in that group meeting and that Peruri answered them with great sincerity. Balson says that the Town Crier decided not to move forward at that time with publishing his letter, in part because a publication deadline had just passed. Mr. Balson was not satisfied with the meeting outcome.

Mr. Balson believes that the public has a “right to know.”  Lalahpolitico believes that voters can consider for themselves whether they want an ex-hedge fund manager who was called as a witness in a big insider trial, for a LASD trustee. Mr. Peruri has done many fine works for his Covington School. He seems to support “school choice” and supports reformer Marshall Tuck for California School Superintendent.  He has certain positions on local school issues and a decision-making style you may or may not like. Nobody is perfect. You, dear voter, weigh the positives and negatives for yourself. I won’t do it for you.

The Letter from Bill Balson:

To the Editor,

Sangeeth Peruri , a candidate for Los Altos School District Board, was implicated for receiving insider information from Doug Whitman.[1]    Federal Judge Rakoff ruled on July 27, 2012 that “Defendant’s motion to exclude evidence that Whitman provided inside information about Marvell to Sangeeth Peruri is hereby denied.”[2]   Doug Whitman, a resident of Atherton, was convicted of insider trading and is scheduled to begin a two-year sentence this month according to court documents.[3]  Mr. Peruri has not been indicted, but was terminated by his employer, according to BrokerCheck, while he was an investment manager at Columbia Investments, a subsidiary of Ameriprise.[4]  The termination followed four days after the evidence Judge Rakoff described was presented in pretrial proceedings for Mr. Whitman.

Each member of the Los Altos community must now decide whether Mr. Peruri’s conduct rises to the level that would prevent his faithful execution of the duties of LASD Board member.  The LASD Board has fiduciary responsibility for hundreds of millions of dollars in revenue and assets, requiring the highest ethical standards.[5]

In 2012, Wesley Wang, a consultant to hedge funds, pleaded guilty to insider tips involving Marvell according to the New York Times.[6]  The Wall Street Journal reported that “Wang would get information from Whitman relating to Polycom and Marvell, which Whitman indicated was from his ‘contacts’ and, in exchange, Wang would provide Whitman with inside information on Cisco and other companies.”[7]  Judge Rakoff allowed evidence to be introduced that “…Whitman provided inside information about Marvell to Sangeeth Peruri …”.  As reported by the Wall Street Journal,  Mr. Whitman’s conviction also involved “…secret tips about technology companies he received from Roomy Khan, a former technology-company employee and his onetime neighbor; and Karl Motey, an independent research consultant who taped phone calls as part of his cooperation with the government.”[8]

Reporting rules[9] are required by FINRA[10] and are not discretionary for NYSE[11] members.  Disclosure is mandatory as taught in Series 7 exams, a requirement for Mr. Peruri.[12]   FINRA rules also govern accurate U5 form filing[13], so Columbia’s termination reason which included “failure to escalate”, has a strong presumption of credibility.

LASD needs Board members who are above reproach.  Mr. Peruri needs to publically address the implications of his involvement with Mr. Whitman and others.  LASD needs Board members who recognize wrongdoing and have the moral courage to promptly report the misconduct.

Sincerely, Bill Balson

Mr. Balson is a certified Financial Risk Manager with the Global Association of Risk Professionals and a 26-year resident of Los Altos School District.  Mr. Balson maintains an IRA with Ameriprise. The author contacted Carlos Melville, Ameriprise and Katherine Goldstein, AUSA who each had no comment; and Sangeeth Peruri, LASD candidate who denied any wrongdoing.

 


[1] Case 1:12-cr-00125-JSR, Document 85, Filed 07/27/12

[2] Marvell refers to Marvell Technology Group Ltd., a semiconductor company with U.S. headquarters in Santa Clara, CA (http://investor.marvell.com/phoenix.zhtml?c=120802&p=irol-irhome)

[3] Case 1:12-cr-00125-JSR Document 166 Filed 04/21/14

[4] BrokerCheck Report for Sangeeth Peruri, CRD # 3088584, Report #62661-49695, downloaded Sept. 12, 2014

[7] Ibid, WSJ

[8] Ibid, WSJ

[10] Financial Industry Regulatory Authority (http://www.finra.org/)

[11] New York Stock Exchange, all member companies permitted to submit orders must follow the rules of the exchange

About the author

lalahpolitico

Norma Schroder is an economics & market researcher by trade and ardent independent journalist, photographer and videographer by avocation. Enthralled by the growth of the tech industry over the decades, she became fascinated with the business of local politics only in the past couple of years.

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