SEC Charges Former Manager At Silicon Valley Company with Insider Trading Ahead of Negative Earnings Announcement

ADMINISTRATIVE PROCEEDING
File No. 3-20840

May 2, 2022 - The Securities and Exchange Commission today announced the institution of settled proceedings against Balasubrahmanya Kuchibhotla, a former manager at Nutanix, Inc. ("Nutanix"). The SEC's order finds that Kuchibhotla sold Nutanix stock and traded Nutanix options contracts based on confidential information he learned at work in advance of the company's February 28, 2019 quarterly earnings announcement. Kuchibhotla agreed to pay more than $585,000 to settle the proceedings.

According to the SEC's order, Kuchibhotla learned in the course of his employment that Nutanix's financial condition had declined during the company's second fiscal quarter, and that, as a result of Nutanix's diminished performance, the company implemented measures for financial tightening that included salary and hiring freezes. Less than a week before Nutanix's February 28, 2019 earnings announcement, Kuchibhotla sold 7,475 Nutanix shares and executed a series of bearish transactions in Nutanix options contracts. On February 28, 2019, after the market close, Nutanix announced disappointing quarterly earnings results for its second fiscal quarter of 2019, and Nutanix's stock price dropped 32.7% on March 1, 2019, the next trading day. Kuchibhotla realized $292,980 in profits and loss avoidance from his illicit trades.

Without admitting or denying the SEC's findings, Kuchibhotla agreed to cease and desist from further violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 and to pay a civil penalty of $585,960.

The SEC's investigation was conducted by John P. Mogg of the Division of Enforcement's Market Abuse Unit in the San Francisco Regional Office and supervised by Market Abuse Unit Assistant Regional Director Steven D. Buchholz and Unit Chief Joseph G. Sansone.