Barai Analyst Says Jiau Passed Nonpublic Information

Jun 14 2011 | 12:33pm ET

A former analyst at Barai Capital Management testified yesterday that he and his firm routinely received insider information from expert network consultants, including Winifred Jiau, who is on trial for selling that information.

Jason Pflaum said that Jiau's information about two technology companies was "to the 'T,'" accurate to the 100th decimal point.

Pflaum, who is cooperating with prosecutors, testified that he listened in on conversations between Jiau and his boss, Samir Barai. He also communicated during the phone calls with Barai via instant message; Barai, who pleaded guilty in the case last month, is hearing-impaired.

The analyst told the jury that he and Barai received inside information from expert networks.

"The one we used the most was Primary Global Research," the firm at the center of the Justice Department's crackdown on expert-networks and the one that Jiau worked on, Pflaum said. He added that when the government approached him about cooperating in October, they played him a tape of a phone call between himself and Mark Longoria, another former Primary Global Consultant.

Longoria, formerly of Advanced Micro Devices, is currently in plea talks.

But Pflaum's focus, of course, was on Jiau. He testified that she provided "non-public" information, including "very specific revenue numbers, gross margins—in some cases operating margins—earnings-per-share information.

Pflaum said he first began listening in on Jiau's calls in May of 2008, just months after he started at Barai. He said the hedge fund paid Jiau as much as $10,000 per month for her "recipes," as she allegedly called her tips.

Prosecutors presented an instant-message conversation between Barai and Jiau as Marvell Technology announced its earnings—earnings that had allegedly been leaked by Jiau to the hedge fund a day earlier.

"M is up," Jiau wrote to Barai with a  smiling emoticon.

"Cookbook, yep recipe is very sweet," Barai responded.

"I'm your lucky lady. I should cook more often."

"Very luck man—I am."

During the phone call between Jiau and Barai, Pflaum and Barai corresponded via instant-message.

"can u hear," Barai asked.

"804m," Pflaum responded. "Revs."

Marvell would report net revenues of $804 million the following day.

On cross examination, Pflaum acknowledged that he had both smoked marijuana and failed to pay withholding taxes on his nanny's paycheck.

Elsewhere in the New York federal courthouse, another defendant in the case learned he'd have to face trial. James Fleishman, a former sales manager at Primary Global, lost his bid to have the securities fraud indictment against him tossed.

"I'm going to deny that motion," U.S. District Judge Jed Rakoff said. Fleishman has pleaded not guilty.

In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...


Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...


Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…


Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.