Image for representational purposes. Image for representational purposes.

An Indian-origin ex-private equity investor has been jailed for 20 months for tipping off two friends about the proposed 2013 acquisition of Cooper Tire & Rubber Company by India-based Apollo Tyre, an insider trading scheme that netted over $1 million in illegal profits.

Amit Kanodia, 49, of Brookline, was sentenced yesterday by US District Court Judge Nathaniel Gorton to 20 months in prison, two years of supervised release including 100 hours of community service, a fine of $200,000 and forfeiture of $242,500.

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He was also ordered to forfeit $242,500, which represented his portion of the illegal trading profits. In October last year, Kanodia was convicted by a federal jury, following a six-day trial, of one count of conspiracy and 10 counts of securities fraud.

In the spring of 2013, Kanodia tipped off his two friends, Iftikar Ahmed and Steven Watson, about the contemplated acquisition of Cooper Tire & Rubber Company by India-based Apollo Tyres.

Kanodia learned about the possible acquisition from his wife who was General Counsel for Apollo at the time. In the months leading up to the public announcement of the acquisition, both Ahmed and Watson purchased shares and options in Cooper Tire, which trades on the New York Stock Exchange.

On the day of the announcement, Cooper Tire’s share price increased 41 per cent, and Ahmed and Watson began selling their interests in the company for a combined profit of more than $1 million.

Both Ahmed and Watson paid Kanodia a portion of their illegal profits as part of the deal between them.

In November 2016, Watson was sentenced to two years of probation and ordered to pay a fine of $25,000. He was also ordered to forfeit the almost $170,000 in illegal trading profits that he made on the scheme. Ahmed, an IIT Delhi and Harvard Business School graduate, remains a fugitive.

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