US PROSECUTORS yesterday announced criminal charges against five people in connection with a long-running insider-trading investigation, accusing an “expert network” employee and company insiders of providing information to hedge funds.
The allegations were filed in court papers by the office of Preet Bharara, the US attorney in Manhattan, and involve the revelation of secret information from technology companies Apple, Dell, Advanced Micro Devices, Flextronics International and Taiwan Semiconductor Manufacturing. Prosecutors allege that four company executives acted as consultants for an independent research firm, Primary Global Research, and provided non-public information to hedge funds and other clients of the firm.
No hedge fund employees were charged in connection with the probe. Neither Flextronics nor Primary Global have been charged with any wrongdoing.
In one instance, Walter Shimoon, an employee of Flextronics, obtained information about a top-secret Apple product, which later became the iPad device, according to court papers. Mr Shimoon could not be reached for comment.Prosecutors also charged James Fleishman, an executive at Primary Global, with conspiracy and wire fraud charges. Primary Global said Mr Fleishman has been employed since 2006 and had been placed on leave. Mr Fleishman could not be reached for comment.
Mr Fleishman is the second Primary Global employee to be charged. Last month, prosecutors announced fraud charges against Don Chu, a former employee, for allegedly providing inside information to firm clients. Prosecutors alleged Mr Chu passed inside information to Richard CB Lee, a co-operating witness in the investigation into Galleon Group co-founder Raj Rajaratnam. Mr Rajaratnam is scheduled to be tried in February on insider-trading charges, which he denies.
Primary Global, based in Mountain View, California, says on its website it has consultants “focusing on semi-conductors, data centres, software, telecommunications or internet”.
Mark Longoria, an AMD supply chain manager, was also arrested by the FBI on conspiracy and fraud charges for allegedly telling a co-operating witness about AMD revenue information, product sales figures and gross-margin information. He received $200,000, according to court documents.
Mr Shimoon was the senior director of business development at Flextronics, which supplied electronic components to Apple’s iPhone and iPod devices. Prosecutors allege Mr Shimoon provided confidential sales forecast information and new product features about Apple’s iPhone.
He worked for Primary Global from 2007 until November 2010 and was paid $22,000.
– (Copyright The Financial Times Limited 2010)
