Founder of VC-backed ShopClues faces US charges
Sandeep Aggarwal, founder of VC-backed Indian e-commerce site ShopClues, has been arrested in the US in connection with the SAC Capital Advisors insider trading investigation. He is charged with passing confidential information to a trader concerning Microsoft’s partnership with Yahoo in 2009.
At the time, Aggarwal was an internet analyst at research firm Collins Stewart, covering Microsoft and Yahoo. According to the Securities & Exchange Commission (SEC) complaint, a friend at Microsoft gave Aggarwal information on joint venture negotiations between the two companies, which he emailed to numerous clients, including SAC.
He followed up with calls to clients, including Richard Lee, then a trader at SAC. Lee responded by buying large amounts of Yahoo stock for SAC and his personal account. When news of the partnership became public one week later, Yahoo's stock price rose approximately 4%.
Aggarwal worked at Microsoft in the US before moving into equities research. In addition to Collins Stewart, he held positions at Oppenheimer & Co, Citigroup and Caris & Company. He returned to India in 2011 to set up ShopClues.
The company claims to be India's first and largest managed marketplace - differing from many e-commerce sites in that it is strictly B2C, products are not auctioned, and it handles end-to-end fulfillment of orders. The site offers a range of goods including consumer electronics, clothes, footwear and toys.
ShopClues has close to 350 employees based in Gurgaon, New Delhi, Mumbai, and Vadodara.
It received Series A funding from Nexus Venture Partners and an undisclosed private investor in February 2012. The Series B round came in March of this year, with Nexus, Helion Venture Partners and Teruhide Sato - CEO of Japanese group buying site Netprice - putting in $10 million.
Aggarwal was arrested by the FBI in California on Monday and released on bail the following day. Also on Tuesday, he was charged with insider trading in a civil suit launched by the SEC.
The charges come after a broad indictment was filed last week against SAC, a $14 billion hedge fund founded by Steven Cohen. SAC and its entities deny any wrongdoing, but Lee has pleaded guilty and is cooperating with the government.
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