NY prosecutor: Insider traders relied on tech tips
Friday, June 3, 2011
NEW YORK (AP) — A California researcher engaged in insider trading by delivering tomorrow’s news today to hedge fund contacts, a prosecutor told a jury during opening statements at the first trial to result from the government’s probe of those who peddle inside information as if it were legitimate research.
Assistant U.S. Attorney David Leibowitz said in U.S. District Court in Manhattan that Winifred Jiau, 43, received more than $200,000 for feeding inside information to two hedge fund managers in 2008. Lawyer Joanna Hendon countered that her client never engaged in insider trading.
“Winifred Jiau would give the men who paid her tomorrow’s news today,” Leibowitz said. The prosecutor said Jiau conspired with a senior financial analyst that she met while working temporarily in 2007 at computer chips manufacturer Nvidia Corp. to get information about Nvidia’s sales and profits before they were announced publicly.
He said she then fed the information to the hedge fund managers, along with information from a co-conspirator who worked in the finance department of Marvell Technology Group Limited. Those hedge fund managers included Samir Barai, who made $800,000 in 18 days in 2008 after he bought $4 million worth of Marvell stock just before an earnings announcement that Jiau had tipped him about, Leibowitz said.
Barai, the 39-year-old owner of the Barai Capital Management hedge fund in Manhattan, pleaded guilty last week to insider trading charges.
Leibowitz said prosecutors will prove their case through testimony from cooperators seeking leniency at their sentencing and through taped telephone conversations of Jiau along with documents including emails, instant messages and trading records.
He said jurors will learn that Jiau communicated in code with her co-defendants, sometimes using “cooks” to refer to those who provided inside information, “sugar” to refer to money she was paid for her tips and “recipe” for inside information. The prosecutor quoted from one transcript, saying Jiau told Barai in one written correspondence: “anyhow, I will know something when I got the sugar. before that, I don’t know anything.”
Leibowitz said witnesses will include Son Ngoc Nguyen of San Jose, Calif., a senior financial analyst for Nvidia who pleaded guilty to insider trading charges last week as well, admitting that he fed Jiau secrets about his company from 2007 through 2009.
Leibowitz said Nguyen will testify that he never received any money for his tips, only promises that Jiau would help him get an edge in his own trading in the stock market.
Hendon said her client moved to the United States from Taiwan 20 years ago to attend Stanford University before settling near San Francisco and becoming a U.S. citizen.
She said Jiau decided to become a consultant in the securities industry with an expertise in computer chip companies after working for two years in Taiwan at a semiconductor company. The lawyer said Jiau quit advising hedge funds at the end of 2008 because she wanted to do something different.
“There was no insider trading, and there was certainly no crime of insider trading,” Hendon said.
Jiau has been unable to make $500,000 bail since her December arrest in a government crackdown on specialists in the financial industry who pass off inside information about companies as legitimate research.
Prosecutors say the Fremont, Calif., woman provided inside information while she worked as a consultant for two years for Primary Global Research, a Mountain View, Calif., firm. Eight of 13 people charged in the probe have pleaded guilty.
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