He was charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million. According to the SEC's complaint, Mr Krishnamoorthy made approximately $48,000 in illicit profits through insider trading.
Federal prosecutors said Mr Krishnamoorthy learned through the course of his work that the private equity firm Golden Gate Capital intended to acquire the online analytics and marketing firm Neustar.
Mr Krishnamoorthy then began trading in Neustar securities through two brokerages accounts that he allegedly kept hidden from his employer, which had been approached by Golden Gate Capital to finance the transaction, according to the report.
"As alleged in our complaint, Krishnamoorthy was entrusted with confidential, market-moving information by his employer and he misused it for personal gain," said Andrew M. Calamari, Director of the SEC's New York Regional Office.
Mr Krishnamoorthy was presented in Manhattan federal court before US Magistrate judge Kevin Nathaniel Fox on Tuesday. Acting Manhattan US Attorney Joon Kim said Mr Krishnamoorthy was charged with violating his duty to his company and trading on insider information.
"Avaneesh Krishnamoorthy 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," she said.
This was the first criminal insider trading case filed by Ms Kim, who in March succeeded Indian-American Preet Bharara, who was sacked by new President Donald Trump as part of his administration reshuffling.