Dublin man pleads guilty for insider trading of millions at Ross stores

The Ross Dress for Less store in Livermore, Calif., on Friday, February 15, 2008. While most retailers have been watching their sales drop, Ross Dress for Less has had solid sales increases and raised its earnings guidance earlier this month. Many brand-concious shoppers have “traded down” from pricier retailers to stores like Ross, where they can find chic labels at a discount. The Pleasanton-based retailer operates “off-price” department stores, which means it sells merchandise for less than the manufacturer’s suggested price. Many of the goods Ross sells come from higher-end department stores or the surplus of manufacturers.(Doug Duran/Contra Costa Times)

By Angela Ruggiero

PUBLISHED: February 2, 2019 at 6:00 AM PST

DUBLIN — A Dublin man pleaded guilty in federal court Thursday to charges related to an insider trading scheme of Ross Stores stocks that netted him at least $3.5 million in illegal profits.

Saleem M. Khan, 54, admitted to conspiracy and securities fraud charges. According to the Department of Justice, from July 2009 to October 201,2 Khan obtained private information related to the sales and financial performance of Ross Stores, which then had its headquarters in Pleasanton. Khan received the information from an unnamed tipster who worked for Ross at the time.

Using the information, Khan bought and sold securities issued by Ross and traded them on the NASDAQ stock exchange. Khan was accused of sometimes trying to conceal the scheme by using the brokerage accounts of one or more other people.

In his plea agreement, Khan admitted he provided benefits to this Ross employee tipster, including $130,000 and purchasing items for the worker. Khan admitted to making more than $3.5 million profit in the scheme.

Khan was indicted in November 2017 and in his plea deal Thursday, pleaded guilty to one count of conspiracy to commit securities fraud and nine counts of securities fraud, according to the Department of Justice. A remaining count of obstruction of justice will be dismissed if he complies with the terms of the plea deal.

He faces a maximum sentence of 25 years for each count, and a $250,000 fine. Sentencing will be on June 24.

Khan also was sued in a civil case by the Securities and Exchange Commission in 2014 related to the same insider trading scheme. In September 2016, before the criminal indictment, the court ordered Khan to pay more than $15 million in penalties. Khan agreed to settle the charges against him without admitting or denying the allegations of the civil complaint at the time.