Tech analyst latest to plead guilty in insider case

NEW YORK Thu Dec 23, 2010 6:23pm EST

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NEW YORK (Reuters) - A California technology consultant cooperated with prosecutors and pleaded guilty in the government's widening probe of researchers suspected of tipping hedge funds with inside information on companies, according to court documents released on Thursday.

The independent consultant, Karl Motey, of Coda Group Inc in Los Altos, made phone calls to gather evidence for prosecutors, including confidential information from sources at Marvell Technology Group Ltd.

He also obtained insider information from a source at United Microelectronics Corporation semiconductor company in Taiwan, his plea agreement said. UMC is the world's second-largest contract chipmaker.

Motey could not be reached for comment. His lawyer, Lee Altshuler, declined to comment as did Marvell Technology. Representatives of UMC could not immediately be reached for comment.

Court documents unsealed in U.S. District Court in New York said Motey pleaded guilty on December 14 to charges of conspiracy and securities fraud, days before prosecutors announced the arrests of four other people linked to so-called expert networking firms.

"Motey, the tippees and others known and unknown executed trades in the securities of Marvell and other public companies for purposes of earning unlawful profits," the charging document said. "In exchange for, in part, providing inside information, Motey received payments through brokerage firms located in New York."

It said the offenses took place from 2007 to March 2009.

The case stems from a probe stretching back three years or longer that intensified on November 22 when FBI agents raided hedge fund offices in Boston; Stamford, Connecticut; and New York for information.

One of the four people arrested on December 16 was accused of leaking secrets about Apple Inc's iPad ahead of its launch. Those arrested included three technology company executives and a salesman for Primary Global Research, which had hired the three to work as consultants to fund managers on the tech industry.

At least one other person apart from Motey -- former Dell Inc employee Daniel DeVore -- is known to have pleaded guilty in the case that spun off from the high-profile investigation of Galleon hedge fund founder Raj Rajaratnam.

One indication that the probe has longer to run was a prosecutor's request to a judge to delay DeVore's sentencing to 2013 "owing to the large nature of this investigation" and his continuing cooperation, according to a transcript of the December 10 plea proceeding.

The Wall Street Journal reported on Monday that Motey was a business contact of a partner of money manager Richard Choo-Beng Lee, who pleaded guilty in the Galleon case and is also cooperating with authorities.

Sri Lankan-born Rajaratnam was arrested in October 2009 and he has vowed to clear his name at trial, which is scheduled to start on February 28. Rajaratnam is among two dozen former traders, lawyers, hedge fund managers and company executives who were charged in October and November 2009.

Of those, 14 pleaded guilty, including 11 who agreed to cooperate with investigators and could be called to testify at trial.

(Additional reporting by Dan Levine; Editing by Steve Orlofsky and Matthew Lewis)

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Comments (2)
ROWnine wrote:
Time for RICCO to introduce them to his little friends inside.

Dec 23, 2010 9:37pm EST  --  Report as abuse
breezinthru wrote:
A crook is a crook whether wearing a hooded sweatshirt or a silk suit.

Insider trading undermines the trust that citizens need to have in their financial systems. Betraying the public trust for personal gain should be severely punished with large fines and prison time, not just a little spank on the hand.

Dec 23, 2010 11:04pm EST  --  Report as abuse
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