Analysis Group Expert Report Successfully Considered in SEC Prosecution of Securities Fraud
May 10, 2018
Analysis Group was retained by the US Securities and Exchange Commission (SEC) to assist in the prosecution of a complaint against Nauman A. Aly. The SEC alleged that Aly fraudulently manipulated the price of a publicly traded security – shares of a semiconductor manufacturing company called Integrated Device Technology, Inc. (IDTI) – by submitting a false merger-related Schedule 13D filing in the SEC's public database, EDGAR. Using a call option strategy related to the stock, Aly netted over $425,000 in profit in 2016.
The SEC retained Analysis Group and its affiliate, Alan Grigoletto, to provide an expert report, with support from a team led by Vice President Lauren Kindler. Mr. Grigoletto, who has more than 35 years of experience trading and investing in options, provided an overview of call option strategy and opined that the defendant's purchase of the IDTI call options was highly speculative and materially impacted the price of IDTI's stock price. Mr. Grigoletto also used options data to demonstrate that Aly's Schedule 13D statements were false.
Both the SEC and Aly moved for summary judgment. On March 27, 2018, US District Judge Paul Gardephe of the Southern District of New York denied Aly's motion to strike Mr. Grigoletto's expert report and granted summary judgment for the SEC. Citing the report extensively throughout his opinion, Judge Gardephe found that Aly had committed fraud by manipulating the price of IDTI's stock for his own benefit, in violation of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5.