FBI Arrests Four Over Apple, Dell Insider Trading

The FBI has arrested four people it believes are involved in selling trade secrets associated with companies such as Apple, Dell and AMD, and allegedly selling this information to hedge funds.

According to the FBI and the US Justice Department, four executives were arrested last Thursday and accused of trafficking in confidential corporate information. A fifth man has also pleaded guilty in the case. It seems as though the FBI investigation has been ongoing for some time now.

Hedge Fund Link

The FBI and Justice Department said that some of those who were arrested, include people who are suspected of channelling secrets from Dell, Apple etc to hedge funds. According to the Washington Post, these hedges funds then traded on that information. There is no mention of any hedge fund names at this stage, but the hedge funds are not thought to include any big names from Wall Street.

Instead, investigators are said to be looking at “expert networks” firms that connected corporate insiders with hedge fund executives. They have focused on Primary Global Research, a California-based firm.

One of those arrested by the FBI last Thursday was James Fleishman, who according to the San Francisco Chronicle is one of the top sales executives at Primary Global Research. Fleishman was charged with wire fraud and conspiracy to provide confidential corporate information. He had subsequently been freed on bail of $700,000 (£450,000).

The other arrests include  former “consultants”. These include Mark A. Longoria, who had worked for chip maker Advanced Micro Devices; Walter Shimoon, who had worked for electronics manufacturing firm Flextronics International, and Manosha Karunatilaka, who had been with Taiwan Semiconductor Manufacturing. All have been charged with wire fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.

Meanwhile Daniel Devore, formerly an executive with computer giant Dell who had consulted for Primary Global Research, has reportedly pleaded guilty to wire fraud and conspiracy to commit wire fraud and securities fraud.

Corrupt Insiders

“A corrupt network of insiders at some of the world’s leading technology companies served as so-called consultants who sold out their employers by stealing and then peddling their valuable inside information,” Preet Bharara, the US attorney in Manhattan, said in a statement.

“The information trafficked by the four ‘consultants’ went way beyond permissible market research; it was insider information,” said FBI Assistant Director-in-Charge Janice Fedarcyk. “And the fifth defendant was directly involved in the transfer of inside information from the consultants to hedge funds and other end users. The more than $400,000 the firm paid the four ‘consultants,’ merely to participate in phone calls with firm clients, is an indication of the value placed on the information. This wasn’t market research. What the defendants did was purchase and sell insider information. Our investigation is most assuredly continuing.”

According to the NYDailynews, secrets about the iPhone were among insider trading tips that led to the arrests.