Saturday, 23 August 2014
Last updated 21 hours ago
Jun 7 2011 | 2:22pm ET
A former SAC Capital Advisors portfolio manager yesterday said that expert-network consultant Winifred Jiau's tips were "perfect" and acknowledged that he violated SAC policy by speaking with her.
Noah Freeman also implicated his former boss at hedge fund Sonar Capital Management, where he worked before moving to SAC in the summer of 2008.
On the stand for his second day, Freeman testified that Jiau passed "absolutely perfect" information about earnings at Marvell Technology Group and Nvidia Corp. from 2006 to 2008. He said he passed those tips both to fellow SAC trader Donald Longueuil, Barai Capital Management founder Samir Barai and Sonar chief Neil Druker. Longueuil and Barai have pleaded guilty in the case; Druker has not been accused of any wrongdoing.
"She provided us with almost complete financial results before they were announced," Freeman testified about Jiau, who consulted for Primary Global Research. "It gave us the ability to know what the company was going to say before they said it. That gave us a huge leg up."
Druker's lawyer told Reuters that Freeman was a dishonest former employee "falsely seeking to implicate others at Sonar."
Freeman also testified that he and Barai paid Jiau $1,000 a month for her tips, and later $5,000 per month. He said he especially liked Primary Global, as it billed by the month rather than the hour, adding that his payments to the firm at SAC took the form of higher trading commissions to hide his behavior from SAC's compliance department.
SAC has not been accused of any wrongdoing.
Jiau is the first person to face trial in the Justice Department's crackdown on expert networks. Nine people have pleaded guilty in the case, several implicating Jiau.
Freeman painted an unflattering picture of his source, whose information may have been "perfect" but whose actions were less than. He said she would frequently reschedule meetings or make phone calls at strange hours, and was "very, very difficult" to deal with.
On one occasion, Freeman said, he sent a dozen Maine lobsters to Jiau for Thanksgiving, as she requested. She didn't pick up the pricey shipment.
"Winnie never picked up her lobsters," Freeman's secretary, no fan of Jiau, wrote to him in an e-mail. "Typical Winnie to leave 12 lobsters to die at Fed Ex. She has no heart."
Jiau faces up to 25 years in prison if convicted.
Aug 4 2014 | 7:42am ET
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The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
The Alpha Pages Editor's Note