A former expert consultant to hedge funds on Tuesday became the latest man to be convicted in a wide-ranging prosecution of insider trading on Wall Street.
James Fleishman, 42, of Santa Clara, Calif., was convicted of conspiracy and wire fraud by a federal jury that deliberated for less than a day after a 2 1/2 week trial. As the verdict was read in U.S. District Court in Manhattan, he wiped his eyes and ran his hand through his blond hair. Fleishman faces up to 25 years at sentencing, which was set for Dec. 21.
It was the latest in a string of convictions resulting from a crackdown by the government on insider trading by hedge funds that control billions of dollars and can make millions of dollars on a single reliable tip.
The prosecution of Fleishman and others resulted after a probe that produced the conviction of more than two dozen employees of hedge funds and public companies. That investigation was expanded to include so-called networking firms that linked hedge fund managers and public company employees together to share information.
Assistant U.S. Attorney David Leibowitz told jurors at closing arguments Monday that Fleishman was aware that hedge fund traders and public company employees were sharing inside information during the telephone chats he arranged.
"He not only knew it, he helped make it happen," Leibowitz said.
The prosecutor said Fleishman made more than $800,000 for three years of work as an executive at Primary Global Research, a Mountain View, Calif.-based firm.
"This case was about people who worked at and used an expert networking firm to traffic in confidential business information to get an illegal edge," Leibowitz said.
Defense lawyer Ethan Balogh had argued that Fleishman worked "honestly and openly with no intent to steal."
"He had no basis to believe others were stealing, misappropriating information; rather he was an honest salesman doing his job," Balogh said.
Prosecutors said the conspiracy that Fleishman participated in enabled hedge fund managers to hear about highly confidential Apple sales forecasts information, new product features for the iPhone and a top-secret project known internally at Apple as "K48," which became the iPad.
When he announced the charges, U.S. Attorney Preet Bharara alleged that 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."