NEW YORK (Reuters) - The U.S. Securities and Exchange Commission said on Thursday it has charged six former consultants and employees of California expert network firm Primary Global Research with insider trading.
The charges are the first brought by the U.S. investor protection agency in the U.S. government’s major investigation into insider trading at hedge funds.
In a civil complaint filed in U.S. district court in Manhattan, the SEC claimed that technology company employees Mark Anthony Longoria, Daniel DeVore, Winifred Jiau and Walter Shimoon profited from their inside knowledge of companies like Advanced Micro Devices Inc, Apple Inc, Dell Inc, Flextronics International Ltd and Marvell Technology Group Ltd by leaking confidential information to Primary Global’s investor clients.
It also charged two Primary Global employees, Bob Nguyen and James Fleishman, with facilitating the transfer of information. Formal criminal charges were also filed against Fleishman in the same court on Thursday. A grand jury indictment charged him with conspiracy to commit wire fraud and conspiracy to commit securities fraud.
Hedge funds and other investors who traded off those tips generated nearly $6 million in illicit gains, the SEC said.
Jiau, Shimoon, Longoria and Fleishman had previously been arrested and criminally charged by prosecutors in New York in the case. DeVore and Nguyen have pleaded guilty to taking part in the insider trading.
The SEC said its investigation of expert networks is ongoing. Expert network firms specialize in matching hedge funds and other investors with industry experts for research and consulting advice.
“While it’s legal to obtain expert advice and analysis through expert networking arrangements, it’s illegal to trade on material nonpublic information obtained in violation of a duty to keep that information confidential,” the SEC said in a statement.
A Primary Global spokesman declined to comment on the new charges.
Since late last year, eight people have been criminally charged in the government’s insider trading probe. The SEC did not name former Primary Global employee Don Chu or Taiwan Semiconductor Manufacturing manager Manosha Karunatilaka in its complaint on Thursday. The two were among the eight charged in the insider trading probe.
The case is SEC vs. Longoria et al, U.S. District Court, Southern District of New York.
Editing by Steve Orlofsky and Matthew Lewis