A California-based former consultant for an expert networking and an investment advisory firm, Primary Global Research LLC, has been arrested by the federal authorities on charges related to her involvement in an insider trading scheme and has been detained for the New Year weekend.
Winifred Jiau, 43, also known as Wini, was arrested on two charges of conspiring to commit securities fraud and engaging in securities fraud by selling material, non-public information (inside information) about Marvell Technology Group and Nvidia Corporation to Primary Global clients who were portfolio managers at hedge funds. Jiau sold the information between 2006 and December 2008 and received over $200,000 as payment.
According to the complaint unsealed in Manhattan federal court, Jiau obtained inside information, including detailed financial earnings, about Nvidia and Marvell and sold that information to portfolio managers at hedge funds.
According to the FBI release, on May 23 and May 28, 2008, Jiau had telephone conversations with two portfolio managers at separate hedge funds, during which she advised the portfolio managers of Marvell's quarterly revenues, gross margins and earnings per share (EPS) for the Marvell quarter ending on May 3, 2008.
Similarly, in August 2008, she provided the same hedge fund managers with Marvell's quarterly revenues, gross margins and EPS for the following quarter, ending on August 2, 2008.
The information, which she provided was accurate and preceded Marvell's public announcement of its quarterly financial results.
In her conversations with the hedge fund managers, several of which were recorded by one of the hedge fund managers, Jiau made clear that she received the inside information from an employee at Marvell.
By trading on the information provided by her about Marvell's earnings for the quarter ending May 3, 2008, one of the hedge funds earned a profit about $820,000 from trades in Marvell securities.
Jiau has been charged with two counts. On the first count of conspiracy to commit securities fraud, she faces a potential penalty of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense and for second count of securities fraud carries a maximum potential penalty of 20 years in prison and a maximum fine of $5 million.
Jiau was produced before U.S. Magistrate Judge Nandor J. Vadas in San Francisco on Dec. 29 and was granted a $250,000 bail. She has also been ordered to surrender her U.S. and Taiwan passports and submit to electronic monitoring. However, as Jiau's surety failed to appear in court, she remains in custody.
The investigation and arrest were made by President Barack Obama's Financial Fraud Enforcement Task Force, which has been formed to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.