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January 4, 2011 > Insider Trading Arrest - US woman arrested in insider trade scheme

Insider Trading Arrest - US woman arrested in insider trade scheme

By Larry Neumeister, Associated Press

NEW YORK (AP), Dec 29 _ A woman who tipped off two portfolio managers about the unannounced earnings of technology companies is the latest person arrested in a federal crackdown on consultants and others who specialize in feeding inside information to hedge funds, federal authorities announced Wednesday.

Winifred Jiau, 43, was ordered detained until a Monday bail hearing in federal court in San Francisco. She had been arrested Tuesday at her Fremont, California, home. Her lawyer, Josh Cohen, did not immediately return a message for comment.

Jiau was charged with securities fraud and conspiracy to commit securities fraud for accepting more than $200,000 over a two-year period from an expert networking firm that promises to provide ``institutional money managers and analysts with market intelligence'' through a ``Global Advisory Team of Experts,'' according to a release from U.S. Attorney Preet Bharara.

Although the name of the firm was not in court papers, the same language had been used after previous arrests to refer to Primary Global Research, a Mountain View, California-based firm that advertised constuling services to investors on industry trends, issues and regulations.

According to prosecutors, Jiau provided detailed financial earnings information about multiple publicly traded companies, including Marvell Technology Group Ltd. and Nvidia Corp.

A criminal complaint in U.S. District Court in Manhattan said she told two portfolio managers at separate hedge funds in May 2008 about Marvell's quarterly revenues, gross margins and earnings and did so again three months later, prior to the earnings statements.

Authorities said that during the conversations, several of which were recorded by one of the hedge fund managers, she made clear that she received the inside information from a Marvell employee.

As a result of the information, one of the hedge funds made more than $820,000 in profits trading in Marvell securities, prosecutors said.

The latest arrest is part of a widening probe targeting those in the financial services industry who glean secrets from public companies and share them as research.

Prosecutors several weeks ago charged an executive at Primary Global Research and three ``expert consultants'' with conspiracy.

The latest investigation grew from what Bharara last year described as the largest hedge fund insider trading case in history. That probe resulted in charges against 23 people, alleging that they enabled more than $50 million in illegal profits.

Arrests in that case included Sri Lanka-born Raj Rajaratam, a one-time billionaire hedge fund founder who has insisted that he only made trades based on publicly known information. He is free on $100 million bail while he awaits trial.

Bharara said investigators for the first time made extensive use of wiretaps in the insider trading probe, a tactic normally reserved for organized crime and drug investigations.

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