Another guilty plea in crackdown on research firms

NEW YORK (AP) — Federal prosecutors portrayed a California financial research firm as an incubator for insider trading as an eighth person connected to the company pleaded guilty Tuesday to securities fraud charges. It was the latest step in the government’s crackdown on the sharing of secrets about public companies passed along as products of research.

Bob Nguyen, 32, of Stockton, Calif., pleaded guilty to conspiracy to commit wire fraud and securities fraud and a separate count of wire fraud in U.S. District Court in Manhattan.

In a release, prosecutors said Nguyen, in a cooperation deal with the government, admitted that one of the goals of his firm was to recruit current employees of public companies as experts who would provide nonpublic secrets about their companies, including information about revenue and company clients.

Nguyen worked at Primary Global Research, based in Mountain View, Calif., between January 2008 and last February. The firm has not been charged in connection with the government’s probe and has repeatedly been identified in court papers only as an “expert-networking” firm headquartered in Mountain View with offices in Manhattan and San Francisco.

Besides Nguyen, authorities also have charged two other employees of Primary Global and five consultants of the company.

Prosecutors said Nguyen’s main role at the company was to solicit employees of companies to become paid consultants for Primary Global. A message for comment left with Primary Global on Tuesday was not returned.

During his plea, Nguyen said some of the industry experts touted by Primary Global were actually “industry insiders, that is, employees of public companies.”

He said he learned through other Primary Global employees that one of the company’s goals was to recruit current employees of public companies. He said he agreed with other Primary Global employees to recruit experts who would pass along inside information so others could make securities transactions illegally.

“It was also my understanding that certain current employees of public companies would provide current material and nonpublic information about their company, including information about their company’s revenues, suppliers and customers to PGR (Primary Global Research) clients,” Nguyen said.

Nguyen and his lawyer declined to comment as they left court.

Although the charges to which he pleaded guilty carry a potential prison term of up to 25 years, Nguyen’s cooperation deal makes it likely that prosecutors will write a letter to the sentencing judge recommending leniency as long as his cooperation continues to satisfy the government.

The probe targeting those in the financial services industry who mask inside information as legitimate research is a spinoff of what U.S. Attorney Preet Bharara has called the biggest hedge fund insider trading case in history.

That investigation, revealed with arrests last year, accused more than two dozen defendants of conspiring to share secrets that led to more than $50 million in illegal profits.

Among those arrested was Raj Rajaratnam, a one-time billionnaire who founded the Galleon group of hedge funds. Free on $100 million bail, he has pleaded not guilty and maintains that he only traded on publicly available information.

GD Star Rating
loading...
Posted in Finance and tagged , , , , , .

Leave a Reply

Your email address will not be published. Required fields are marked *