Monday, 2 March 2015
Last updated 1 hour ago
Dec 30 2010 | 12:58pm ET
Yet another former Primary Global Research consultant has been arrested in the Justice Department's massive insider-trading investigation.
Winifred Jiau was arrested Tuesday at her Fremont, Calif., home. Prosecutors say she sold confidential information about at least two companies to two hedge fund managers working at two different hedge funds.
Jiau passed "on point and accurate" information about quarterly results from Marvell Technology Group to the two hedge fund traders, one of whom work at two separate hedge funds in May 2008, prosecutors said. Neither those traders nor the hedge fund are identified except as CC-1 and CC-2 for the managers and Hedge Fund A. CC-1 is said to be the founder of Hedge Fund A.
The complaint against Jiau, who was ordered held pending a bail hearing today, also cites a cooperating witness who worked at Hedge Fund A. That witness said he or she "understood that Jiau obtained the information about Marvell and Nvidia from a source who was not authorized to disseminate it."
According to prosecutors, the hedge funds paid Jiau $200,000 for the information through Primary Global; one allegedly reaped $820,000 in profits. She passed more information about Marvell to the same two managers in August 2008, according to the complaint.
Jiau is the seventh person charged in the current insider-trading case, and the first woman. All of those charged to date—including one who has pleaded guilty and is cooperating with investigators—were either employees of or consultants for Primary Global, one of the expert-networks that appear to be a major target of the investigation.
According to Primary Global, Jiau was an "expert consultant" for the firm from September 2006 through December 2008.
Jiau is charged with conspiracy to commit securities fraud and securities fraud. Prosecutors told U.S. Magistrate Judge Nandor Vadas in San Francisco that the evidence against Jiau is "strong" and includes a "cooperating witness and audio recordings." They also said that Jiau is a flight risk; her car was running when the Federal Bureau of Investigation arrived at her home and there was packed luggage. Jiau, a U.S. citizen, told the agents she had just returned from a trip to Asia, but prosecutors said that trip occurred in October.
Jiau faces more than 20 years if convicted.
In addition to being the seventh person with Primary Global links arrested, Jiau is also the second with links to Marvell to be connected to the case. Marvell's Menucher Menuchehry—who has not been accused of any wrongdoing—has been identified as one of the experts contacted by analyst Karl Motey, a cooperating witness in the investigation. Menuchehry, who consulted for both Primary Global and Gerson Lehrman Group, was questioned by the FBI over the summer. One of the hedge funds he spoke with through Gerson Lehrman was Diamondback Capital Management, one of the three hedge funds raided by the FBI last month.
Diamondback has said the government has assured it that it is not a target of the investigation.
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…