Consultant recruited "spies" for inside data: U.S.

Reuters News
Posted: Jun 16, 2011 3:16 PM
Consultant recruited "spies" for inside data: U.S.

By Grant McCool

NEW YORK (Reuters) - Former technology consultant Winifred Jiau cultivated friends as "spies" at chipmakers Nvidia Corp and Marvell Technology Group Ltd to provide corporate secrets she shared with hedge fund employees, a U.S. prosecutor told a jury on Thursday.

Recorded phone calls, instant messages and emails showed that Jiau used code language to try to hide wrongdoing, the prosecutor said in closing arguments at Jiau's insider trading trial in New York.

In those communications, Jiau referred to her two sources as "cooks," to money as "sugar," and confidential information as "recipes," Assistant U.S. Attorney Avi Weitzman told the jury.

"She cultivated colleagues and their friends and pumped them for information," Weitzman said. "With these well-placed insiders at Nvidia and Marvell, Winifred Jiau had spies in those companies."

Taiwan-born Jiau, 43, has pleaded not guilty to charges of conspiracy and securities fraud. She is the only person to go on trial so far among more than a dozen charged in a U.S. probe of so-called expert network firms, which match business experts with investment managers looking to better understand various industries.

The government says that some expert networking employees have trafficked in confidential, inside data such as upcoming corporate earnings figures that could give money managers an edge if they traded on the information.

Jiau has been denied bail since her arrest in December at her house in Fremont, California, where she lived alone with her dog, Hunter. If convicted, Jiau faces up to 25 years in prison.

One of her two lawyers will present the closing argument for the defense later on Thursday.

The government said Jiau, who worked as a consultant for the Primary Global Research expert networking firm, received checks totaling $208,000 over two years after she gave hedge fund managers precise earnings information on California chipmakers Nvidia and Marvell in 2008 before public announcements.

Jiau also traded on the information, the government said.

Prosecutors said the "well-placed insiders" whom Jiau cultivated were former research analyst Sonny Nguyen at Nvidia and accountant Stanley Ng at Marvell.

Vietnam-born Nguyen, 39, pleaded guilty to charges and testified against Jiau.

Trial records show Ng was put on leave by Marvell in January after he declined to cooperate with an internal investigation.

Ng could not be reached to comment. Marvell spokesmen did not return calls for comment.

At least 10 other defendants have pleaded guilty to criminal charges in the case, including consultants and two hedge fund managers who said they received tips from Jiau and arranged her fees -- Samir Barai of Barai Capital Management and former SAC Capital hedge fund manager Noah Freeman.

The case is USA v Winifred Jiau et al, U.S. District Court for the Southern District of New York, No. 11-00161.

(Editing by Steve Orlofsky)