Insider Trading Scene Within Network of ‘Experts’

Jack Humphrey, Regulatory journalist
February 03, 2011 /

What may seemed to be normal consulting services by expert networks professing to provide professional investment research to their clients would come out as an insider trading scheme in the ongoing investigation of the Securities and Exchange Commission (SEC).

Four technology company employees that purported to provide consulting services to Primary Global Research LLC (PGR) have been charged today, together with their six network consultants and two PGR employees, for trading inside information regarding technology firms like AMD, Apple, Dell, Flextronics, and Marvell. The defendants agreed to settle SEC’s charges ordering them to disgorge their ill-gotten profits.

In a filed complaint before a federal court in Manhattan, the SEC claims that PGR consultants Mark Anthony Longoria, Daniel DeVore, Winifred Jiau and Walter Shimoon have shared “ non-public confidential information about quarterly earnings and performance data” of the said technology companies with PGR hedge funds through its employees, namely Bob Nguyen and James Fleishman. The consultants generated $6 million in illegal gains from the insider trading.

Longoria, a manager in AMD’s desktop global operations group, illegally traded sales figures and financial results of AMD’s various operational units with PGR clients from January 2008 to March 2010. He received more than $130,000 from the insider trading scheme.

On the other hand, DeVore, a Global Supply Manager at Dell, shared Dell’s internal sales forecasts and information about the pricing and volume of its purchases from suppliers with PGR clients from 2008 to 2010, generating $145,000 in illegal profits.

The SEC added that the vice president of Business Development for Components in the Americas at Flextronics, Shimoon, shared non-public information about Flextronics and its customers including Apple, Omnivision, and Research in Motion with PGR clients to trade securities from September 2008 to June last year. He allegedly received $13,600 for talking to PGR and its clients.

Jiau, a “private” PGR expert who had contact with select PGR clients, had provided confidential information about company-specific financial results of Marvell and other technology firms with PGR clients prior to public announcement. The insider trading had been taking place from September 2006 to December 2008, earning for Jiau more than $200,000 for the alleged consulting services.

The insider trading case has been investigated by Sanjay Wadhwa, Jason Friedman, Joseph Sansone, Daniel Marcus — members of the SEC’s Market Abuse Unit in New York — together with Matthew Watkins, Neil Hendelman, Diego Brucculeri and James D’Avino of the New York Regional Office.

 

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