Tuesday, 22 July 2014
Last updated 48 min ago
Jul 6 2011 | 11:56am ET
In New York federal court yesterday, another former Primary Global Research consultant admitted he passed confidential information on to the expert network's hedge fund clients. But Walter Shimoon's plea hearing was perhaps most notable for the revelation of another SAC Capital Advisors connection to a major insider-trading case.
Prosecutors Antonia Apps said that one of the beneficiaries of Shimoon's information, previously identified in court papers as a White Plains, N.Y., hedge fund, was Kingdom Ridge Capital. The firm was launched in 2008 by Christopher Zepf and Brian Thonn; the former was a technology portfolio manager at SAC and that latter an equity analyst. Both worked at the hedge fund giant from 2002 through 2007.
SAC itself has never been accused of any wrongdoing in either the expert-network or Galleon Group insider-trading cases. But two former SAC portfolio managers have pleaded guilty in the former and several others have been implicated in both cases.
Kingdom Ridge, which currently manages less than $350 million, earned $560,000 trading on Shimoon's tips in October 2009 alone, according to court papers unsealed yesterday. Shimoon's contact at the firm was employee Nick Caputo.
Neither Kingdom Ridge nor Caputo have been charged with any wrongdoing.
The Securities and Exchange Commission, which accuses Shimoon of tipping 11 hedge funds, included a transcript of a conversation between Shimoon and Caputo in its lawsuit, in which Shimoon is heard passing on then-confidential information about both Apple Inc.'s iPhone 4 and iPad.
During his plea hearing, Shimoon admitted to passing "specific, non-public information" about his company, Flextronics International, and several companies that it did business with.
"I knew [the PGR customers] used the information in purchasing and selling securities," he admitted.
Shimoon said PGR paid him $200 per hour to speak with its clients. He also said he received $27,500 from independent research firm Broadband Research, whose founder, John Kinnucan, is famed for refusing to cooperate with the Federal Bureau of Investigation. Kinnucan has not been accused of any wrongdoing.
Shimoon, the tenth person to plead guilty of 14 charged in the case, faces up to 30 years in prison on the conspiracy, securities fraud and wire fraud charges when he is sentenced in two years.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…