US SEC charges Indian with fraud

Order says venture capital professional defrauded investors for own gain

The US Securities and Exchange Commission (SEC) has said it had frozen the assets and taken other measures against an Indian venture capital professional. He has been accused of fraud.

Iftikar Ahmed sold stake in two e-commerce companies in which he had shares to a venture capital firm, Oak Investment Partners, with which he was employed. He sold it at a higher price to his firm without disclosing his own interest to investors and pocketed the difference.

The SEC statement alleges Ahmed had his firm pay $20 million for a $2-million stake in an Asian firm in December 2014. The extra $18 million went into his own account. He made another $2 million in similar fashion through selling stake at an inflated price in a Chinese e-commerce firm in August 2014.

“In a third transaction, the complaint alleges that in 2013, Ahmed advised an Oak fund to invest $25 million in a US-based e-commerce company without disclosing his interest in I-Cubed Domains LLC, which had a significant stake in the same company. The following year, at Ahmed’s advice, the Oak fund paid $7.5 million to I-Cubed to buy shares in the company that I-Cubed had acquired for $2 million. The complaint alleges Ahmed again failed to disclose his ties to I-Cubed, violating his duty to act in the best interest of the Oak fund investors and avoid self-dealing,” it said. The SEC has frozen $55.08 million of his assets, said the statement.  

Ahmed is a graduate from the Indian Institute of Technology, Delhi. He also has a management degree from Harvard Business School.

The SEC had earlier passed an order against Ahmed in relation to insider trading ahead of a merger between tyre makers Apollo and Cooper.

The earlier order had detailed profits of $1.1 million which he made through inside knowledge of an impending deal between the two companies. Apollo announced a proposal to Cooper Tire to purchase its stock for $35 per share in June 12, 2013.

The earlier order says Ahmed obtained information about this from the husband of a key Apollo Tyre official involved in the transaction. “The SEC's complaint charges Ahmed with violating federal anti-fraud laws and related SEC anti-fraud rules. The SEC is seeking a preliminary injunction to continue the freeze on Ahmed’s assets and seeks to have Ahmed return his allegedly ill-gotten gains with interest and pay civil monetary penalties,” said the SEC statement. The complaint had been filed earlier but was made public on May 13.