SEC v. SIVANNARAYANA BARAMA, No. 5:19-CV-08207-RS, Northern District of California (July 29, 2024) — Judgment

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.

SIVANNARAYANA BARAMA,
Defendant.

Case No.  19-cv-08207-RS

ORDER GRANTING MOTION FOR
SUMMARY JUDGMEMENT

I. INTRODUCTION
 Janardhan Nellore was an IT administrator employed by Palo Alto Networks, Inc.
(“PAN”). The Securities and Exchange Commission (“SEC”) brought this action against Nellore
and four other individuals, alleged to have been Nellore’s friends, asserting the defendants
engaged in a scheme over several years to trade illegally in PAN’s stock based on advance inside
information Nellore obtained regarding the company’s earnings results. Judgments have
previously been entered in this action against all defendants except Sivannarayana Barama. The
SEC now seeks summary judgment against Barama, based on the collateral estoppel effects of a
criminal judgment entered against him following a jury trial, arising from the same conduct.
 Barama’s opposition rests solely on his contention that the criminal judgment was
erroneous and should be reversed on appeal. Because the pendency of an appeal does not preclude
the application of collateral estoppel, the motion in this case will be granted and judgment will be
entered. Enforcement of the monetary aspects of the judgment, however, will be stayed pending

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conclusion of the proceedings in the criminal appeal.

II.  BACKGROUND
 As noted, the SEC filed this case against Barama, and several other individuals, alleging
they engaged in a multi-year, insider trading scheme. In particular, the SEC alleged that from late
2015 through mid-2018, Barama received tips from Nellore to trade in the securities of PAN,
based on material nonpublic information that Nellore obtained through his employment about the
company’s upcoming earnings announcements. See Compl. ¶¶ 23, 28-29, 31, 34-35, 65, 68-70,
and Appendix.
 At the same time that the SEC filed this action, the court unsealed the superseding
indictment in the related criminal case. That case alleged essentially the same inside trading
scheme by which Nellore tipped Barama (and the others) to trade ahead of PAN’s earnings
announcements, from 2015 through 2018. The superseding indictment, like the SEC’s civil
complaint, describes the coordinated trades made by Nellore, Barama, and the other tippees to take
advantage of Nellore’s inside information.
 Based on the allegations, the superseding indictment charged Barama with one count of
conspiracy and attempt to commit securities fraud (in violation of 18 U.S.C. § 1349) and six
counts of securities fraud and aiding and abetting (in violation of 18 U.S.C. §§ 1348 and 2). Id. ¶¶
32-35. At Barama’s criminal trial in December of 2022, the government dismissed the last two
counts (aiding and abetting), and the jury found Barama guilty on Counts Two through Five
(securities fraud), and not guilty on Count One (conspiracy). On August 22, 2023, judgment was
entered against Barama in the criminal case, and he was sentenced to 18 months of imprisonment.
 The specific transactions involved in the four counts proven at Barama’s criminal trial
were those he initiated in advance of the four public earnings announcements by PAN: Count
Two: November 21, 2016 (first fiscal quarter of 2017); Count Three: February 28, 2017 (second
fiscal quarter of 2017); Count Four: May 31, 2017 (third fiscal quarter of 2017); and Count Five:
August 31, 2017 (fourth fiscal quarter of 2017). As the basis for its claim that Barama violated

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Section 10(b) of the Exchange Act and Rule 10b-5, the complaint here alleges his trading in
advance of those same, four quarterly earnings announcements by PAN. See Compl. Appendix
(identifying the above four earnings announcements, among others not relevant to this motion).

III. LEGAL STANDARDS
 Summary judgment is proper “if the pleadings and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The purpose of summary
judgment “is to isolate and dispose of factually unsupported claims or defenses.” Celotex v.
Catrett, 477 U.S. 317, 323-24 (1986). The moving party “always bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those portions of the
pleadings and admissions on file, together with the affidavits, if any, which it believes demonstrate
the absence of a genuine issue of material fact.” Id. at 323 (citations and internal quotation marks
omitted). If it meets this burden, the moving party is then entitled to judgment as a matter of law
when the non-moving party fails to make a sufficient showing on an essential element of the case
with respect to which that party bears the burden of proof at trial. Id. at 322-23.
The non-moving party “must set forth specific facts showing that there is a genuine issue
for trial.” Fed. R. Civ. P. 56(e).The non-moving party cannot defeat the moving party’s properly
supported motion for summary judgment simply by alleging some factual dispute between the
parties. To preclude the entry of summary judgment, the non-moving party must bring forth
material facts, i.e., “facts that might affect the outcome of the suit under the governing law . . . .
Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986). The opposing party “must do more than simply show
that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v.
Zenith Radio, 475 U.S. 574, 588 (1986).

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IV. DISCUSSION
 Under the doctrine of issue preclusion (also referred to as collateral estoppel), an issue of
fact or law necessary to a judgment is conclusive against a party in subsequent litigation. Montana
v. United States, 440 U.S. 147, 153 (1979); see also, SEC v. Stein, 906 F.3d 823 (9th Cir. 2018)
(conviction for criminal securities law violations under 18 U.S.C. § 1348 precluded relitigation in
SEC enforcement action for violations of Exchange Act Section 10(b) and Rule 10b-5, based on
same facts). Here, the SEC has shown that the criminal judgment against Barama is based on a
sufficiently identical factual basis, and that the other criteria for issue preclusion are satisfied, such
that he cannot relitigate liability in this action. Barama does not argue otherwise, or present any
argument or evidence to show there is any triable issue of material fact as to the preclusive effect
of the criminal judgment. Nor does Barama challenge the SEC’s calculation of his liability in
restitution or the propriety of injunctive relief.
 Barama’s opposition boils down to an argument that his conviction in the criminal case
was erroneous and will be reversed on appeal, or that, at a minimum, judgment in this case should
not enter until that appeal is final. The Ninth Circuit has addressed this issue:

We have held that a final judgment retains its collateral estoppel effect, if any, while
pending appeal . . . This rule creates the potential for a collateral estoppel-based judgment
based on a prior judgment that is subsequently vacated or reversed on appeal . . . . Indeed,
“in some cases, litigants and the courts have collaborated so ineptly that the second
judgment has become conclusive even though it rested solely on a [prior] judgment that
was later reversed.”  . . . In the context of district court litigation, this potential problem
can be “avoided, whether by delaying further proceedings in the second action pending
conclusion of the appeal in the first action, by a protective appeal in the second action that
is held open pending determination of the appeal in the first action, or by a direct action to
vacate the second judgment.” . . . . Accordingly, we have held that the benefits of giving a
judgment preclusive effect pending appeal outweigh any risks of a later reversal of that
judgment.

Collins v. Horton, 505 F.3d 874, 882-83 (9th Cir. 2007) (citations omitted).
 Here, there is no reason to delay entry of the judgment and its injunctive provisions. The
proposed judgment submitted by the SEC includes provisions requiring Barama to pay the money
identified as disgorgement within 30 days. Without implying there is any likelihood Barama will

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prevail on appeal, the SEC’s motion for summary judgment is granted, and it proposed judgment
will be entered, with a modification that the obligation to pay disgorgement will become effective
upon any final disposition of the criminal appeal that does not reverse the criminal judgment.

V.  CONCLUSION
 The SEC’s motion for summary judgment is granted. Its proposed judgment will be
entered separately, with the modifications described above and other non-substantive changes.

IT IS SO ORDERED.

Dated: July 25, 2024
______________________________________
RICHARD SEEBORG
Chief United States District Judge

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

v. 

 
SIVANNARAYANA BARAMA, 

Defendant. 
 

Case No.  19-cv-08207-RS    

 
 
ORDER GRANTING MOTION FOR 
SUMMARY JUDGMEMENT 

 

 

 

I. INTRODUCTION 

 Janardhan Nellore was an IT administrator employed by Palo Alto Networks, Inc. 

(“PAN”). The Securities and Exchange Commission (“SEC”) brought this action against Nellore 

and four other individuals, alleged to have been Nellore’s friends, asserting the defendants 

engaged in a scheme over several years to trade illegally in PAN’s stock based on advance inside 

information Nellore obtained regarding the company’s earnings results. Judgments have 

previously been entered in this action against all defendants except Sivannarayana Barama. The 

SEC now seeks summary judgment against Barama, based on the collateral estoppel effects of a 

criminal judgment entered against him following a jury trial, arising from the same conduct. 

 Barama’s opposition rests solely on his contention that the criminal judgment was 

erroneous and should be reversed on appeal. Because the pendency of an appeal does not preclude 

the application of collateral estoppel, the motion in this case will be granted and judgment will be 

entered. Enforcement of the monetary aspects of the judgment, however, will be stayed pending 

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conclusion of the proceedings in the criminal appeal. 

 

II.  BACKGROUND 

 As noted, the SEC filed this case against Barama, and several other individuals, alleging 

they engaged in a multi-year, insider trading scheme. In particular, the SEC alleged that from late 

2015 through mid-2018, Barama received tips from Nellore to trade in the securities of PAN, 

based on material nonpublic information that Nellore obtained through his employment about the 

company’s upcoming earnings announcements. See Compl. ¶¶ 23, 28-29, 31, 34-35, 65, 68-70, 

and Appendix.  

 At the same time that the SEC filed this action, the court unsealed the superseding 

indictment in the related criminal case. That case alleged essentially the same inside trading 

scheme by which Nellore tipped Barama (and the others) to trade ahead of PAN’s earnings 

announcements, from 2015 through 2018. The superseding indictment, like the SEC’s civil 

complaint, describes the coordinated trades made by Nellore, Barama, and the other tippees to take 

advantage of Nellore’s inside information.  

 Based on the allegations, the superseding indictment charged Barama with one count of 

conspiracy and attempt to commit securities fraud (in violation of 18 U.S.C. § 1349) and six 

counts of securities fraud and aiding and abetting (in violation of 18 U.S.C. §§ 1348 and 2). Id. ¶¶ 

32-35. At Barama’s criminal trial in December of 2022, the government dismissed the last two 

counts (aiding and abetting), and the jury found Barama guilty on Counts Two through Five 

(securities fraud), and not guilty on Count One (conspiracy). On August 22, 2023, judgment was 

entered against Barama in the criminal case, and he was sentenced to 18 months of imprisonment. 

 The specific transactions involved in the four counts proven at Barama’s criminal trial 

were those he initiated in advance of the four public earnings announcements by PAN: Count 

Two: November 21, 2016 (first fiscal quarter of 2017); Count Three: February 28, 2017 (second 

fiscal quarter of 2017); Count Four: May 31, 2017 (third fiscal quarter of 2017); and Count Five: 

August 31, 2017 (fourth fiscal quarter of 2017). As the basis for its claim that Barama violated 

Case 3:19-cv-08207-RS   Document 102   Filed 07/25/24   Page 2 of 5

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Section 10(b) of the Exchange Act and Rule 10b-5, the complaint here alleges his trading in 

advance of those same, four quarterly earnings announcements by PAN. See Compl. Appendix 

(identifying the above four earnings announcements, among others not relevant to this motion).  

 

III. LEGAL STANDARDS 

 Summary judgment is proper “if the pleadings and admissions on file, together with the 

affidavits, if any, show that there is no genuine issue as to any material fact and that the moving 

party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The purpose of summary 

judgment “is to isolate and dispose of factually unsupported claims or defenses.” Celotex v. 

Catrett, 477 U.S. 317, 323-24 (1986). The moving party “always bears the initial responsibility of 

informing the district court of the basis for its motion, and identifying those portions of the 

pleadings and admissions on file, together with the affidavits, if any, which it believes demonstrate 

the absence of a genuine issue of material fact.” Id. at 323 (citations and internal quotation marks 

omitted). If it meets this burden, the moving party is then entitled to judgment as a matter of law 

when the non-moving party fails to make a sufficient showing on an essential element of the case 

with respect to which that party bears the burden of proof at trial. Id. at 322-23.  

The non-moving party “must set forth specific facts showing that there is a genuine issue 

for trial.” Fed. R. Civ. P. 56(e).The non-moving party cannot defeat the moving party’s properly 

supported motion for summary judgment simply by alleging some factual dispute between the 

parties. To preclude the entry of summary judgment, the non-moving party must bring forth 

material facts, i.e., “facts that might affect the outcome of the suit under the governing law . . . . 

Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 247-48 (1986). The opposing party “must do more than simply show 

that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. 

Zenith Radio, 475 U.S. 574, 588 (1986). 

  

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IV. DISCUSSION 

 Under the doctrine of issue preclusion (also referred to as collateral estoppel), an issue of 

fact or law necessary to a judgment is conclusive against a party in subsequent litigation. Montana 

v. United States, 440 U.S. 147, 153 (1979); see also, SEC v. Stein, 906 F.3d 823 (9th Cir. 2018) 

(conviction for criminal securities law violations under 18 U.S.C. § 1348 precluded relitigation in 

SEC enforcement action for violations of Exchange Act Section 10(b) and Rule 10b-5, based on 

same facts). Here, the SEC has shown that the criminal judgment against Barama is based on a 

sufficiently identical factual basis, and that the other criteria for issue preclusion are satisfied, such 

that he cannot relitigate liability in this action. Barama does not argue otherwise, or present any 

argument or evidence to show there is any triable issue of material fact as to the preclusive effect 

of the criminal judgment. Nor does Barama challenge the SEC’s calculation of his liability in 

restitution or the propriety of injunctive relief. 

 Barama’s opposition boils down to an argument that his conviction in the criminal case 

was erroneous and will be reversed on appeal, or that, at a minimum, judgment in this case should 

not enter until that appeal is final. The Ninth Circuit has addressed this issue: 

 

We have held that a final judgment retains its collateral estoppel effect, if any, while 

pending appeal . . . This rule creates the potential for a collateral estoppel-based judgment 

based on a prior judgment that is subsequently vacated or reversed on appeal . . . . Indeed, 

“in some cases, litigants and the courts have collaborated so ineptly that the second 

judgment has become conclusive even though it rested solely on a [prior] judgment that 

was later reversed.”  . . . In the context of district court litigation, this potential problem 

can be “avoided, whether by delaying further proceedings in the second action pending 

conclusion of the appeal in the first action, by a protective appeal in the second action that 

is held open pending determination of the appeal in the first action, or by a direct action to 

vacate the second judgment.” . . . . Accordingly, we have held that the benefits of giving a 

judgment preclusive effect pending appeal outweigh any risks of a later reversal of that 

judgment.  

 

Collins v. Horton, 505 F.3d 874, 882-83 (9th Cir. 2007) (citations omitted). 

 Here, there is no reason to delay entry of the judgment and its injunctive provisions. The 

proposed judgment submitted by the SEC includes provisions requiring Barama to pay the money 

identified as disgorgement within 30 days. Without implying there is any likelihood Barama will 

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prevail on appeal, the SEC’s motion for summary judgment is granted, and it proposed judgment 

will be entered, with a modification that the obligation to pay disgorgement will become effective 

upon any final disposition of the criminal appeal that does not reverse the criminal judgment. 

 

V.  CONCLUSION 

 The SEC’s motion for summary judgment is granted. Its proposed judgment will be 

entered separately, with the modifications described above and other non-substantive changes. 

 

 

IT IS SO ORDERED. 

 

Dated: July 25, 2024 

______________________________________ 

RICHARD SEEBORG 
Chief United States District Judge 

 

 

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