The board and executive team of ShopClues has backed besieged co-founder and CEO Sandeep Aggarwal, after he was charged with insider trading offences by allegedly providing confidential information about a 2009 Microsoft-Yahoo! deal.
On July 30, Federal Bureau of Investigation officers arrested 40-year old Aggarwal of Gurgaon, India who, as a research equity analyst for a San Francisco financial services firm in mid-2009, allegedly tipped off SAC Capital hedge fund portfolio manager Richard Lee about the then-pending Internet search engine partnership between Microsoft and Yahoo!.
Aggarwal was charged with civil offences by the Securities and Exchange Commission, and now faces criminal charges from the U.S. Attorney's Office for the Southern District of New York, including conspiracy to commit securities fraud and wire fraud — offences which, respectively, carry a maximum of five and twenty years in jail.
Manhattan U.S. Attorney Preet Bharara said, "As alleged, Sandeep Aggarwal leveraged his contacts in the technology industry to obtain an illegal edge in the form of inside information about a highly anticipated development, and then lied about his criminal conduct."
Despite these allegations, ShopClues.com said the e-commerce company’s near 350-strong staff and management are behind co-founder Aggarwal, who was released on a $500,000 bond.
“Sandeep Aggarwal is fully cooperating with the investigating agencies and has complete faith in the US judicial system,” the company said. “The case relates to events that occurred prior to ShopClues inception, and therefore does not involve the business of ShopClues.”
“The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.”
However, the company, in its statement, stressed the credentials of the remaining management team. Last year, the site, a subsidiary of U.S. corporation Clues Network, processed 3.5 million orders on behalf of merchants, and it currently manages and distributes an inventory of 1.8 million products worth over $750 million (45 billion rupees).
In the past year ShopClues with offices in Gurgaon, New Delhi, and Mumbai, raised $14 million from a number of institutional investors, including Helion Venture Partners, Nexus Venture Partners, and Tokyo-based Netprice.
When contacted by TechCrunch, Nexus Venture Partners’s managing director and ShopClues board member Anup Gupta, whose firm led a $4 million Series A investment round, declined to comment.
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