Shopclues Founder Sandeep Aggarwal Back from Exile after the Insider Trading Case

Sandeep Aggarwal, co-founder of online marketplace, Shopclues who had earlier pleaded guilty to an insider trading charge in his previous job as an analyst at Collins Stewart in the US, is now back in India according to a source close to the development.

Sandeep had asked a New York federal judge to allow him to visit his family in India in July earlier this year. The request was relayed to U.S. District Judge Colleen McMahon via a letter and written by Matthew L. Schwartz, one of the attorneys working the case for the government.

The U.S. had agreed to a “revised bail package” which permitted Sandeep to get his passport and was allowed to travel to India for 6 months in exchange for a significant increase of his bail security which includes increased bail amount from $250k to $750k with further conditions.

“Given the increased security, the government has no objection to the trip,” the letter said. “And as the court may recall, the defendant was permitted to travel to India once before without incident.”

As per the agreement, Sandeep has to return to the U.S. by January 31, 2015, unless he is asked to return earlier by the court or the government.

“The purpose of this trip is for the defendant to see his wife and children, including to help them move to a new home.. While the defendant is in India, he will be in regular telephonic contact with the FBI case agent in this matter, who has been working with the defendant in connection with his ongoing cooperation,” said the letter.

Sandeep is scheduled to be sentenced on November 20, but according to the letter the government “anticipates seeking a further adjournment of that date”. However, as of now its not actually decided whether to officially ask the hearing to be delayed. In case the date is not changed then Sandeep had to return to the US for the hearing.

Back Story

Sandeep Aggarwal, a former equity research analyst for a San Francisco-based financial services firm was arrested last year in July by FBI in San Jose. In 2009, he was working as an analyst in Collins Stewart and was covering both Microsoft and Yahoo for his research firm, he was receiving regular updates from his sources in Microsoft and passed on very specific information to Richard Lee, a portfolio manager at hedge fund SAC Capital over a phone call, upon learning about the upcoming Microsoft – Yahoo deal.

Sandeep had later pleaded guilty for the same saying that he did this to improve his standing as an analyst and to increase revenue for his firm. “I know what I did was wrong and I’m very sorry for my conduct,” he said.

Earlier this year , he was banned by the US Security and Exchange Commission (SEC) from trading. According to the SEC order, he was barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent or nationally recognised statistical rating organisation. He was also barred from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock.

Shopclues story till now

Post this, Sandeep had started the online marketplace Shopclues.com in India in Nov 2011 with $2 Mn in funding, after this case he was succeeded by Sanjay Sethi who founded the company with him along with Radhika Ghai Aggarwal and Mrinal.

Shopclues by now had raised over $15 Mn from investors including Helion Venture Partners and Nexus Venture Partners and is now looking to raise over INR 450-600 Cr. from investors including Temasek and Hong Kong-based hedge fund Steadview Capital, reports suggest. Shopclues has witnessed sales of INR 350 Cr. last fiscal, is targeting INR 1,500 Cr. this year.