Thursday, 29 January 2015
Last updated 16 hours ago
Dec 20 2010 | 11:26am ET
A technology analyst who counted several hedge funds among his clients is cooperating with the Justice Department’s wide-ranging insider-trading investigation.
Karl Motey, the head of Los Altos, Calif.-based research firm Coda Group, is the cooperating witness identified as “CW-2” in the criminal complaint against a Primary Global Research employee and three experts formerly employed as consultants by that company, The Wall Street Journal reports. Motey made more than 60 calls to corporate insiders at the behest of investigators, including Marvell Technology Group’s Menucher Menuchehry, previously identified as an expert who consulted with hedge fund Diamondback Capital Management, and Daniel DeVore, the former Dell Inc. employee who pleaded guilty as part of the probe earlier this month. Menuchehry has not been accused of any wrongdoing.
Motey made those contacts as a client of Primary Global. He sought out the company’s services in a call, recorded as part of the investigation, with Primary Global salesman James Fleischman, one of those arrested last week.
Motey has pleaded guilty to securities fraud, according to the complaint against Fleischman and others.
Coda offers research on technology companies to hedge funds and other investors.
According to the Journal, Motey also had dealings with Richard Choo-Beng Lee, the former SAC Capital Advisors trader who is also cooperating with the investigation. Lee, who pleaded guilty as part of the Galleon Group insider-trading case, was IDed as “CW-1” in last week’s complaint.
Of DeVore, Motey told Fleischman during one of their recorded conversations, “He gave me some great information on Dell.” Fleischman allegedly replied, “Oh, good. Yeah, he’s definitely one of our top guys in terms of you, know, everything that we look for, like, you know.”
Things aren’t going well for two of Fleischman’s co-defendants, either. One, Walter Shimoon, remains in jail after a federal judge in San Diego ordered him held. Shimoon, a former Primary Global consultant who worked at Flextronics International, is expected to make a formal bail request today, while prosecutors plan to argue that he is a flight risk.
The other three men arrested in the probe last week, including Fleischman, have all been released on bail.
Flextronics said it has fired Shimoon and is cooperating with the investigation. Another defendant in the case, Manosha Karunatilaka, was also fired by his employer, Taiwan Semiconductor Manufacturing Co., following his arrest.
Karunatilaka was released on $300,000 bail.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…