The SEC is charging former technology company employees with trading non-public information in their roles as consultants for a firm called Primary Global Research.
regulators are continuing their aggressive investigations into insider trading
involving technology companies, with the Security and Exchange Commission
filing charges Feb. 3 against six people-including former Dell and Advanced
Micro Devices employees-involved with a so-called expert network firm.
of the six charged were previously
on similar charges in December, and are part of a larger overall
effort by the federal government to come down hard on insider trading,
including instances involving high-tech companies. The first shot was fired in
October 2009, when investigators arrested a number of Wall
and tech company executives-including 31-year IBM
veteran Robert Moffat
-in an insider trading scheme that prosecutors said
collected more than $25 million in illegal profits.
newest charges stem from an ongoing investigation into insider trading by hedge
funds that reportedly began in November.
the Feb. 3 case, SEC officials arrested three former tech company employees and
another person with contacts in several vendors who also worked as consultants
for a firm called Primary Global Research. According to investigators, the four
tech employees-Mark Longoria, Daniel L. DeVore, Winifred Jiau and Walter
Shimoon-were paid hundreds of thousands of dollars in consulting fees in most
instances to work as expert consultants for Primary Global. In that capacity, the
four were paid to give the firm and its clients expert advice, which could then
be used to set investment directions.
the SEC alleges that all four-who investigators said worked for Primary Global
without the knowledge of their tech company employers-offered non-public
information about their companies or other companies they worked with. The
firm, hedge funds and other investors used the information-which included
earnings numbers and performance data-to garner about $6 million in illegal
profits, according to the SEC.
officials said working for such an expert network is not illegal, but trading
on such non-public information is.
executives and other insiders moonlighting as consultants to hedge funds cannot
blatantly peddle their company's confidential information for personal
gain," Robert Khuzami, director of the SEC's Division of Enforcement, said
in a statement. "These PGR consultants and employees schemed to facilitate
widespread and repeated insider trading by several hedge funds and other
four former tech company employees and two workers at the firm, Bob Nguyen and
James Fleishman, were charged with insider trading, while Fleishman, Nguyen and
Jiau were additionally charged with helping the others in their illegal
to the SEC, Longoria, as a manager in AMD's desktop global operations group,
had access to AMD sales figures and also acquired AMD financial numbers from a
colleague. He gave this data with numberous Primary Global clients before they
were announced publically. Between January 2008 and March 2010, he collected
more than $130,000 in consulting fees.
was a global supply manager at Dell, and gave investors non-pubic information
regarding Dell's internal sales forecasts as well as pricing and volume related
to Dell's purchases from its suppliers. He made about $145,000 between 2008a nd
vice president of business development for components in the Americas at
Flextronics, gained non-public information not only about Flextronics, but also
such customers as Apple, Omnivision, and Research in Motion. Shimoon collected
about $13,600 in fees from Primary Global between September 2008 to June 2010.
Global used Jiau, who investigators had contacts at chip maker Marvell and
other technology companies, as a "private" expert, making her
available to a small group of firm clients, the SEC said. Jiau gave those
clients financial results to a number of companies before those results were
made public. Between September 2006 and December 2008, she received more than
$200,000 in consulting fees.
and Nguyen are accused of receiving specific inside information from the
consultants and passing the it onto Primary Global clients.
Jiau, Shimoon and Fleishman reportedly had previously been arrested and charged
in the case, and DeVore and Nguyen have pleaded guilty to their roles in the
insider trading scheme.