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Tuesday, 24 January 2017
Last updated 49 min ago
Feb 17 2012 | 1:26am ET
A year-and-a-half ago, expert network founder John Kinnucan refused the Federal Bureau Investigation's offer to cooperate in the Justice Department's massive insider-trading probe. Last night, he paid a price for it.
Kinnucan was arrested yesterday afternoon at his home in Portland, Ore. The charges against him are currently sealed, although prosecutors have linked him to three people charged in the insider-trading case surrounding expert network Primary Global Research. The government has said it has wiretaps of conversations between Kinnucan and former SAC Capital Advisors trader Donald Longueuil and Level Global Investors co-founder Anthony Chiasson. In addition, Walter Shimoon, a former consultant for both Primary Global and Kinnucan's Broadband Research, told a judge that he had given Kinnucan material, non-public information.
Longueuil and Shimoon have pleaded guilty in the case; Chiasson was arrested last month and pleaded not guilty to insider-trading charges this week.
At least 10 FBI agents showed up at Kinnucan's home at 4:19 p.m. yesterday, taking him away a few minutes later. He spent last night at the Multnomah County Jail and will make his first appearance before a judge today before likely being sent to New York to face the charges against him.
Kinnucan gained some measure of fame in October 2010 when he e-mailed about 50 clients to inform them that the FBI had approached him about cooperating and that he had refused. Among the recipients were employees of hedge funds Coatue Management, Citadel Investment Group, Maverick Capital and SAC.
Both Kinnucan and SAC have been subpoenaed about their relationship with one another. In addition, Kinnucan said that the FBI sought his help in obtaining evidence against Regnan Rajaratnam, the brother of Galleon Group founder and convicted insider-trader Raj Rajaratnam. Kinnucan has said that neither Galleon nor Regnan Rajaratnam's hedge fund, Sedna Capital Management, were clients.