Tuesday, 16 September 2014
Last updated 10 hours ago
Sep 8 2011 | 12:27pm ET
A former Primary Global Research employee was sentenced yesterday to two years of probation for his role in the insider-trading scandal that engulfed that expert-networking firm. At least one of those experts is unlikely to be so lucky.
Don Ching Trang Chu, the first person arrested in the case, became the first sentenced yesterday. U.S. District Judge Jed Rakoff said yesterday that Chu's role in the scam was "minimal" and didn't warrant jailtime—Chu had faced up to six months in prison.
"The defendant did not financially benefit from this conduct and otherwise has had a clear record," Rakoff said. "I find this to be one of the very rare instances where the [federal sentencing] guidelines"—which called for probation—"range is reasonable."
Chu, who pleaded guilty to conspiracy in June, said that he was "extremely sorry for what I have done." He admitted to passing confidential information to former SAC Capital Advisors trader Richard Choo-Beng Lee, who pleaded guilty as part of the Galleon Group insider-trading case. He also said that his tips were shared with former SAC portfolio manager Noah Freeman and Barai Capital Management founder Samir Barai, both of whom have also pleaded guilty in the case.
Another of those who pleaded guilty in the case, Manosha Karunatilaka, won't likely get off so easily. Federal prosecutors, who pointedly did not object to any sentencing for Chu that fell within the guideline range, have asked that he served as much as almost four years in prison for his role in the scam.
Karunatilaka pleaded guilty in May, admitting that he passed confidential information about his employer, Taiwan Semiconductor Manufacturing, to Primary Global clients, earning himself about $35,000.
Prosecutors said those payments merited a prison term of between 37 and 46 months.
"For tens of thousands of dollars, he cheated the system and provided sophisticated stock traders with an unfair advantage over the average investor," assistant U.S. Attorneys Antonia Apps and David Leibowitz said.
Rakoff is to sentenced Karunatilaka on Sept. 15.
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