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Fugitive New York Banker Nabbed in Australia; Faces A Possible Sentence of 40 Years

A P Kamath in New York

Fifteen months after he fled America, telling his employers that he had a family emergency in India, 33-year-old Arjun Sekhri has been arrested in Sydney, Australia and will be extradited to New York.

Sekhri, who was arrested at Sydney airport on May 30, is charged with insider trading that allegedly netted him and his associates $ 1.8 million in about two and a half months.

Implicated in the scheme are Pratima Rajan, a friend, and Amolak Sehgal, Sekhri's father-in-law. The Securities and Exchange Commission, which sued Sekhri and his associates, persuaded a court in New York last year to freeze the assets of Mahendra and Sharada Sekhri, Arjun's parents.

Sekhri, a former Salomon Smith Barney executive here, allegedly conducted insider trading on six other stocks that underwent mergers in 1997 and early 1998.

His alleged fraud was discovered by a colleague after Sekhri had left Salomon Smith Barney and begun working for Credit Suisse First Boston. But he stopped working there after two days when the SEC began investigating his role in insider trading, sources said. He resigned after a week.

He fled America leaving behind, among other things, a $ 55,000 car he had purchased allegedly from the money made out of illegal trading.

His lawyer Peter Driscolli said on June 1 he believed his client has denied all charges.

Several of Sekhri's friends and an associate at Salomon Smith Barney benefited from his tips, according to officials. Three of his associates have owned up their role, and made restitution to the firm. One of them is serving a two-year jail sentence.

If found guilty, he could face up to 40 years in prison on money laundering count alone, according Mary Jo White, US attorney for the Southern District of New York.

Initially he was charged with two counts of securities fraud and conspiracy to commit securities fraud.

But this week officials framed more charges against him to include money laundering and wire fraud.

Sekhri has a master's degree from the Stern Business School at New York University.

The companies involved in the transactions were MCI Communications, Brooks Fiber Properties, Carson Pirie Scott & Co, Central and South West Corp and Southern New England Telecommunications.

According to the SEC, Sekhri's relatives and friends illegally traded common stock or call options, after receiving tips from him, just before the companies made major public announcements.

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