U.S. Department of Justice

United States Attorney
Southern District of New York

Former TSMC Company Account Manager Pleads Guilty in New York Federal Court to Conspiring to Engage in Insider Trading

NEW YORK – Manosha Karunatilaka pleaded guilty today in Manhattan federal court to conspiring to participate in an insider trading scheme in which he defrauded a public company to obtain material, nonpublic information and provided that information to members of the investment community for the purpose of executing securities transactions, the Justice Department announced.  Karunatilaka participated in the insider trading conspiracy while working as an account manager for Taiwan Semiconductor Manufacturing Company Ltd. (TSMC).  He pleaded guilty before U.S. District Judge Jed S. Rakoff.

“Manosha Karunatilaka thought he could moonlight for an expert networking firm and sell out his employer in the process,” said U.S. Attorney  Preet Bharara.  “With today’s guilty plea, it should now be abundantly clear that his short-term financial gain was hardly worth it.”

According to the information, a complaint previously filed in this case and statements made during today’s guilty plea proceeding, between 2008 and 2010, Karunatilaka and his co-conspirators participated in a conspiracy to obtain inside information, including TSMC product sales and shipping information that was material to both TSMC and TSMC’s customers.  They used an “expert networking” firm for the purpose of facilitating “consultation calls,” during which Karunatilaka provided the inside information to firm clients.  Between January 2008 and June 2010, the firm paid Karunatilaka more than $35,000 for his consultation calls.

On Oct. 8, 2009, for example, Karunatilaka had a telephone conversation with a technology analyst at a financial institution in New York during which he provided material non-public information about TSMC and TSMC’s customers, in violation of his fiduciary and other duties of trust and confidence to TSMC.  In his plea agreement, Karunatilaka admitted that based on his participation in the conspiracy, the inside information that he provided to others resulted in trading gains of more than $1 million.

Karunatilaka, 37, of Marlborough, Mass., pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud.  He faces a maximum sentence of five years in prison, and a maximum fine of $250,000, or twice the gross gain or loss from the offense on the conspiracy count.  In addition, Karunatilaka agreed to forfeit the proceeds he obtained as a result of the offense.

Karunatilaka is scheduled to be sentenced by Judge Rakoff on Sept. 15, 2011, at 4:00 pm.

U.S. Attorney Bharara praised the investigative work of the FBI.  He also thanked the U.S. Securities and Exchange Commission.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Assistant U.S. Attorneys Antonia Apps, Reed Brodsky and David Leibowitz are in charge of the prosecution.


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