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发帖数: 1054 | 1 Larry Neumeister, Associated Press, On Wednesday November 24, 2010, 5:34 pm
NEW YORK (AP) -- The first strike in a new federal offensive to root out
insider trading on Wall Street came Wednesday with the arrest of a
consulting firm executive who prosecutors said tipped off a hedge fund
manager about corporate earnings before they became public.
The arrest of Don Ching Trang Chu of Somerset, N.J., came when investigators
realized he was heading to Taiwan on Sunday. He made the trip frequently,
but authorities were apparently concerned that he was traveling ahead of
what are expected to be multiple arrests in the probe and after he had been
interviewed by FBI agents on Sunday.
Three hedge funds with offices in New York, Connecticut and Massachusetts
were raided Monday in the investigation, and on Tuesday, prominent mutual
fund company Janus Capital Group said it had been subpoenaed. There was no
indication Chu had dealt with those companies.
According to prosecutors, Chu told the FBI agents that employees of public
companies sometimes meet in Taiwan with hedge funds and disclose contracts
and revenue figures, weeks before the companies announce their earnings.
The complaint said some of the evidence against Chu resulted from
conversations he had with Richard Choo-Beng Lee, a former hedge fund co-
manager who has pleaded guilty and is cooperating with the government.
It said Chu in June 2009 appeared to provide secrets about the second
quarter earnings of California chipmaker Atheros Communications to Lee prior
to the public earnings announcement.
The charges against Chu grew from what prosecutors described as the largest
hedge fund insider trading bust in history. Fourteen people have already
pleaded guilty. Last year, the probe ensnared Raj Rajaratnam, a onetime
billionaire and founder of Galleon Group funds, who is free on $100 million
bail and who claims he only traded legally and on public knowledge.
Investigators for Preet Bharara, the top federal prosecutor in Manhattan,
have used wiretaps to capture executives bragging to clients and coworkers
about how to get an inside advantage in securities markets. A federal judge
on Wednesday declared the wiretaps legal over the objections of defense
lawyers who said they are not authorized by law for insider trading cases.
Prosecutors said Chu had boasted to a government cooperator in a secretly
recorded conversation that he knew of a method of electronic communication
that could be hidden from law enforcement.
The federal insider trading probe targets industry analysts, experts and
consultants who are hired for the edge they might provide in the trading of
securities.
Chu, 56, clad in a red shirt and gray pants, declined to comment after he
was released on $1 million bail following a brief appearance before a
federal magistrate judge in Manhattan. His lawyer, James DeVita, said only:
"We will have an opportunity to present a defense, and we'll pursue that."
Chu, who was born in Taiwan and became a U.S. citizen in 1997, worked for
Primary Global Research, which prosecutors said advertised itself as an
independent financial research firm with consultants experienced an array of
industries.
The company promoted him on its website as a veteran in data communications
and a "bridge to Asia experts and data sources."
"Don intimately understands the wireless broadband communications industry,
and has deep connections and relationships in the technology industry,"
according to the website. "Finally, Don is just a fun person to travel with
on the highways and byways of Taiwan."
A telephone message left with Primary Global Research was not immediately
returned.
Chu was charged with one count of conspiracy to commit securities fraud and
one count of conspiracy to commit wire fraud and fraud in connection with
securities. The charges carry up to 30 years in prison.
Authorities said Chu, during one conversation with a cooperator from the
Galleon probe, described a method of electronic communication that he
believed could not be detected by law enforcement.
According to authorities, Chu referred to the method, saying:
"There's no, no, no, no copy," Chu said, according to authorities. "If you,
it's better than personal email. ... There's no copy save in the server.
Even personal email, there is a copy. ... So, ... just talk. Do, don't, don'
t put it down in writing. Dangerous." |
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