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Another Hedge Fund Analyst Aids Insider Trading Probe

By Michael Rothfeld

The new insider trading charges announced by federal prosecutors Wednesday are certain to fuel more speculation -- and anxiety -- in the hedge fund world about which firms' employees are now cooperating with investigators. The criminal complaint against Winifred Jiau, a Fremont, Calif. technology expert, described in the WSJ story here, says she spoke with two hedge fund portfolio managers, identified as CC-1, from Hedge Fund A, and CC-2, from Hedge Funds B and C. CC-1, the founder and principal portfolio manager at Hedge Fund A, allegedly employed CW-1, a research analyst now cooperating with the government, starting in March 2008. The disclosure marks the second hedge fund research analyst that prosecutors have said is cooperating, and the first one to they have said has pleaded guilty in the probe. From the complaint: CC-1 instructed CW-1 to speak to various co-conspirators, several of whom worked at publicly-traded companies, in order to obtain material nonpublic information regarding certain public companies' releases of significant financial information or other market-moving events .... CW-1 listened to conversations among JIAU, CC-1, and CC-2 during which JIAU provided Marvell Inside Information .... Jiau, who has a bail hearing in San Francisco today (it was re-scheduled last night from Jan. 3), is the seventh person charged since late November to have worked as a consultant or employee of Primary Global Research LLC of Mountain View Calif., an expert-network firm that, among other services, hooks up investors with public company employees. A Bloomberg story is here. A NYT story is here. The company said in a statement that its relationship with Jiau lasted from September 2006 until December 2008, but declined to elaborate. By then, she had earned more than $200,000 as a Primary Global consultant, sometimes by going back to sources for more precise information, the complaint says. From the WSJ story: At times, the complaint said, Ms. Jiau told the portfolio managers she couldn't be as precise as they wanted. In one case, she said her contact at Marvell had a new CFO who hadn't approved the numbers yet. In another, her Nvidia contact was waiting for an email from the finance department, according to the complaint. "[H]e's the sales guy and so far he hasn't gotten the whole picture," she said, according to the complaint. "As soon as I get it, I give you guys a buzz." CW-1, who has pleaded guilty to conspiracy and securities fraud, took notes of conversations with Jiau on computer files that the FBI seized on Nov. 12, along with digital recorder CC-1 used to tape calls with Jiau, the complaint said. He or she is a different person than CW-5, another research analyst described as a cooperating witness in a charging document made public Dec. 16 against three other Primary Global consultants and a firm sales manager. That analyst had talks with Mark Anthony Longoria, a consultant who also worked at Advanced Micro Devices Inc., according to the earlier complaint. An AMD spokesperson has said the company appeared to have been victimized and was cooperating with investigators.

Full post as published by Law Blog - WSJ.com on December 30, 2010 (boomark / email).