A former hedge fund manager and a one-time Nvidia Corp analyst on Friday admitted conspiring with a technology industry consultant who is set to stand trial in New York next week, part of a crackdown on insider trading.
Samir Barai, founder of Barai Capital Management, and Sonny Nguyen, a former financial analyst at chipmaker Nvidia, separately pled guilty to criminal charges and could testify at the trial of Winifred Jiau, once a consultant with the Primary Global Research expert networking firm.
They are among more than a dozen people whom prosecutors have charged in the investigation of so-called expert networking firms, which match investment managers with public companies. Prosecutors say they traded illegally on corporate secrets such as earnings before public announcements.
On numerous occasions, I paid for and used the services of an expert networking firm who employed persons working at technology companies, Barai told U.S. Magistrate Judge Kevin Nathaniel Fox in pleading guilty to charges including conspiracy, securities fraud, wire fraud and obstruction of justice.
He identified Taiwan-born Jiau, who has pleaded not guilty and is jailed pending trial on June 1. Her lawyer, Joanna Hendon, declined to comment on Friday's guilty pleas.
Manhattan U.S. Attorney Preet Bharara, in announcing the charges in February, described the expert network industry as something verging on a corrupt business model.
His office has carried forward long-running probes of insider trading at hedge funds, including charges against Galleon Group founder Raj Rajaratnam, who was convicted on May 11 after a two month-long trial.
Another example was raids on three hedge funds last November, a branch of the probe that is continuing.
Documents filed by prosecutors and testimony of a former Barai employee showed that Samir Barai recorded phone calls with Jiau. In the calls, she tells him secrets obtained from insiders at chipmakers Marvell Technology Group Ltd and Nvidia Corp.
Barai told the judge he obtained confidential information from Jiau and traded on it even though at the time he knew it was wrong and illegal. He also said he conspired with two other men, Noah Freeman and Donald Longueuil, who have also pleaded guilty to charges in the case.
The pair once worked for billionaire trader Steven A. Cohen's SAC Capital Advisers. The firm has not been charged with wrongdoing.
The former Nvidia analyst, Sonny Nguyen, 39, told U.S. District Judge Jed Rakoff at a separate proceeding that in 2007 and 2008 he tipped Jiau about chipmaker Nvidia's quarterly financial results before they were announced to the public.
I provided material nonpublic information to my co-conspirators ... about Nvidia Corporation quarterly financial results and in exchange I received similar stock tips, Nguyen told the judge.
He identified Jiau and a man by the name of Stanley Ng as co-conspirators. Jiau was also a contractor in Nvidia's finance department along with Ng, according to court documents.
Santa Clara, California-based Nvidia said in a statement that Nguyen had resigned and it was cooperating with authorities. This was a clear violation of law and our company policies, Nvidia said.
The case is USA v Winifred Jiau et al, U.S. District Court for the Southern District of New York, No. 11-161.
(Reporting by Grant McCool. Editing by Robert MacMillan and Matthew Lewis)