He is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of USD 5 million.
Acting Manhattan US Attorney Joon Kim said Mr Krishnamoorthy made approximately USD 48,000 in illicit profits through the insider trading scheme.
The Securities and Exchange Commission filed a parallel civil complaint alleging that the accused learned that Golden Gate Capital planned to acquire publicly traded advertising technology company Neustar Inc.
He then began trading in Neustar securities. The trading took place in two brokerage accounts that Mr Krishnamoorthy allegedly kept hidden from his employer, which had been approached by Golden Gate Capital to finance the transaction.
Mr Krishnamoorthy was presented in Manhattan federal court before United States Magistrate Judge Kevin Nathaniel Fox yesterday.
Mr Kim said Mr Krishnamoorthy has been charged with violating his duty to his company and trading on insider information.
"He allegedly exploited his access to information about a pending acquisition to purchase stock and options, making tens of thousands of dollars in illegal profit for himself," the attorney said.
The insider trading case is among the first brought by Mr Kim, who succeeded Preet Bharara, Manhattan's top federal prosecutor after he was fired by the Trump administration.
Mr Bharara had successfully prosecuted several high profile insider trading cases, including those against India-born Rajat Gupta and his one time friend and business associate Raj Rajaratnam.
According to the complaint filed in Manhattan federal court, as vice president and risk management specialist, Mr Krishnamoorthy had access to material non-public information concerning mergers and acquisitions for which the investment bank he worked in might potentially provide financing.
In November 2016, Golden Gate Capital contacted the investment bank concerning financing for the acquisition of Neustar. Around that time, he received multiple emails regarding the investment bank's potential involvement in the transaction, including emails that summarised the details of the deal.
In violation of the company's policies and in breach of his duties, Mr Krishnamoorthy used this material non-public information to acquire Neustar stock and options.
In the days and weeks after receiving the emails, and prior to the public announcement of Neustar's acquisition, Mr Krishnamoorthy purchased numerous Neustar call options and shares of its stock in brokerage accounts held in the names of both Mr Krishnamoorthy and his wife.
The public announcement of Neustar's acquisition in December last year resulted in an approximately 20 percent increase in the value of Neustar stock, resulting in a corresponding increase in the value of the call options and equity stock held by Mr Krishnamoorthy and his spouse.