Federal prosecutors in Manhattan said this morning they are bringing charges against 14 people it claims were involved in yet another insider trading network.
The US Attorneys Office for the Southern District of New York is hosting a press conference today outlining the charges, but prior to this, the office supplied El Reg with the complaints filed against the nine individuals charged thus far. Any connection between these new complaints and the ones filed on October 16 against Raj Rajaratnam, the founder of hedge fund Galleon Group, and Danielle Chiesi, an employee at the New Castle Group hedge fund, is as yet unclear.
In the insider trading action that opened three weeks ago, Rajaratnam and Chiesi are accused of executing illegal trades in the shares of Clearwire, Akamai Technologies, PeopleSupport, Google, Advanced Micro Devices, Sun Microsystems, and IBM. Insider information is claimed to have been obtained from executives at Advanced Micro Devices, IBM, Intel, and McKinsey & Co.
Subsequent to the charges, Bob Moffat, who used to run IBM's server, storage and chip business, stepped down. As El Reg goes to press, charges have not been filed against Hector Ruiz, the chairman of AMD chip spinout GlobalFoundries who has been rumored to be the unnamed executive who gave out information about the spinout of the chip business and who this week stepped down as chairman of that company.
The first complaint filed by the DOJ this morning, which you can read here, alleges that Zvi Goffer, a former employee of Schottenfeld Group, a broker dealer located in New York, and of Galleon Group, the hedge fund at the center of the original insider trading scandal, was at the center of another insider trading network. In the complaint against Goffer, he and his alleged co-conspirators are said to have engaged in insider trading between April 2007 and May 2008 in shares of 3Com, Avaya, Kronos, Axcan Pharma, and Hilton Hotels.
Each one of those firms was acquired by private equity firms, and Goffer is alleged to have gathered up information on these deals - from advisors who were working on the deals and who have charges against them where they have been identified - and traded ahead of them. All told, the FBI is said to have identified $11m in illegal profits gained from trades based on insider information relating to the firms mentioned above by Goffer and his co-conspirators.
In a second complaint, which you can read here, Deep Shah, an employee of Moody's Investor Service who worked as an associate analyst, is accused of providing the insider information in 2006 through July 2007 relating to Hilton Hotels being acquired by the Blackstone Group. This is said to have allowed a confidential witness to profit $630,000 illegally, for which Shah is alleged to have received $10,000.
The third case involves Ali Hariri, who worked as vice president of Atheros Semiconductor's broadband carrier networking business unit when illegal trades were done in 2008 through March 2009. In the complaint, (which you can read here),Hariri is accused of providing insider information about quarterly financial figures for Atheros to a confidential witness, who gained $870,000 from trading on this information. ®
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