• Former PwC Employee Latest Star of “Auditor Mishandles Sensitive Client Information”

    By | September 14, 2017

    I haven’t been a Big 4 auditor in quite some time, which means I haven’t taken any training on handling sensitive client information in quite some time. However, my keen sense of self-preservation tells me that if I were in possession of sensitive client information, the kind of information about, say, an upcoming acquisition, I would not trade the acquisition target’s stock. Also, if you are familiar with Bloomberg columnist Matt Levine’s rules of insider trading, I certainly would not trade short-dated out-of-the-money call options on the acquisition target.

    Why? It’s simple: You will get caught. The SEC will be contacting you about your activity. Even if you only told someone about the sensitive client information and they traded on it, the SEC will be contacting them, and your name will come up. You will have a bad time.

    Mayank Gupta must’ve slept through PwC’s most recent “Handling Sensitive Client Information” refresher because it’s clear that he ignored all of the things I’ve covered above. He is no longer an auditor with PwC.

    The SEC’s complaint alleges that, through his audit work at PricewaterhouseCoopers LLP, Mayank Gupta learned that San Jose, Calif.-based Cavium was making imminent preparations to acquire Aliso Viejo, Calif.-based QLogic Corp. According to the SEC’s complaint, before the deal was announced to the public, Gupta called his cousin-in-law Pushpendra Agrawal, and told him that Cavium was going to acquire QLogic and that QLogic was a “sure thing.” Upon arriving at work, Agrawal bought 200 QLogic call options, based on Gupta’s tip. During his lunch break, Agrawal bought an additional 50 QLogic call options, again based on Gupta’s tip. After QLogic announced that it would be acquired by Cavium through a tender offer, QLogic’s stock rose by more than 9 percent, and Agrawal profited by more than $23,785 from the illegal trades.

    I love how the cousin-in-law couldn’t resist; “I’ll just buy 50 more options. Who’s going to notice?”

    A PwC spokeswoman provided the following statement: “Mr. Gupta is no longer with the Firm. PwC is committed to safeguarding confidential client information and provides extensive training and education to its people on the importance of maintaining client confidentiality.”

    Thanks for tuning in to this latest edition of “Big 4 Auditor Mishandles Sensitive Client Info.” We’ll see you next time.

    [SEC]

    • Big4Veteran

      PwC rules:

      STAFF gives his cousin-in-law insider info which he then uses to make $24k in profits = immediate termination of employment

      PARTNER fucks up the easiest task imaginable on one of the firm’s most prestigious and well known clients because he was busy tweeting = slap on the wrist

    • Big4Veteran

      Note to editor: The title of this article is deceiving. He didn’t “mishandle” sensitive client information. He didn’t leave a flash drive on a park bench, or take the privacy screen off his laptop in Starbucks.

      He intentionally tipped his cousin-in-law inside information, which his cousin-in-law then traded on.

    • Tim_Beee

      Based on the names it’s clear we aren’t appreciating cultures where oppressive ideas like “honesty” and “integrity” don’t exist. Shame on all of you for not embracing the multicult.

      • Big4Veteran

        Although not PC, I find this to be a very interesting point and a worthwhile discussion topic. In the US, we tend to talk about “business ethics” like it is a universal concept that exists and is adhered to equally in all countries and in all cultures. But that just isn’t the case. “Business ethics” is a Western concept.

        I imagine that laws like the FCPA seem silly to people in many other countries around the world, and are even viewed to put US businesses at a competitive disadvantage. I’m not arguing against the FCPA (or insider trading rules), but just pointing out that these are foreign concepts to many non-Westerners.

        In many other countries (including some very large economies), bribery of government officials is a perfectly acceptable and common business transaction. So I can imagine how laws against insider trading might be viewed as completely silly to someone coming from one of those countries.

    • Point and Clique

      Always annoyed by those audit associates who seem to aspire to be hotshot day traders but for whatever reason (usually out of a hard limit on their ability to go without sleep for long periods of time), have not gone into IB or what-have-you. There’s this weird self-loathing quality to them, because for all their financial dreams, they’re pulling down a Big 4 audit salary fully knowing how terrible it is, and so they never shut up about their next big score.

    • Isn’t this criminal rather than mishandling?