NEW YORK — U.S. prosecutors in Manhattan filed new charges as part of a national probe of insider trading, accusing a California consultant for an expert networking firm with selling inside information to two unidentified hedge funds.
Winifred Jiau, arrested in Fremont, was accused of selling data on Nvidia Corp. and Marvell Technology Group Ltd., makers of computer components, through the networking firm, according to a filing in Manhattan federal court. The hedge funds paid her $200,000 through the firm, prosecutors alleged.
Jiau, 43, is charged with one count each of conspiracy to commit securities fraud and securities fraud. The first count carries a maximum sentence of 20 years in prison. She appeared this morning in San Francisco federal court and was ordered held in custody by U.S. Magistrate Judge Nandor Vadas, who set a hearing for Jan. 12 on whether to transfer her to New York.
The evidence against Jiau is "strong," Assistant U.S. Attorney Wilson Leung told the judge, adding that there is a "cooperating witness and audio recordings." When asked by Vadas if she understood the charges, Jiau said "I not have a chance to know until now." Barry Portman, her assigned public defender, said the complaint is a "lengthy document." She didn't enter a plea to the charges.
Her arrest follows charges earlier this month against three technology company workers who allegedly sold secrets about Apple Inc., Dell Inc. and Advanced Micro Devices Inc. The men, who worked at AMD, Flextronics International Ltd. and Taiwan Semiconductor Manufacturing Co., were arrested on securities fraud and conspiracy charges for a scheme that Manhattan U.S. Attorney Preet Bharara said operated from 2008 to early 2010.
Also arrested at the time was James Fleishman, a sales manager at Primary Global Research LLC, the expert-networking firm where the three worked as consultants. If convicted, all four face as long as 20 years in prison.
Expert-networking companies such as Mountain View, California-based Primary Global match investors with specialists who provide insight into specific markets. The criminal complaint unsealed earlier this month against the men described the links among Primary Global, the technology experts it employed and unidentified hedge funds willing to pay for inside information.
Santa Clara, California-based Marvell, which makes chips for the BlackBerry phone, declined to comment. Bob Sherbin, a spokesman for Nvidia, also based in Santa Clara, said Jiau was a contractor who left the company about a year ago.
In the Jiau complaint, B.J. Kang, a special agent with the Federal Bureau of Investigation, described the expert networking firm at issue in her case as having a main office in Mountain View, with additional offices in New York and San Francisco.
The firm advertises itself as an "independent investment research firm that provides institutional money managers and analysts with market intelligence," according to the filing, which matches language on the website of Primary Global. A spokesman for Primary Global, Dan Charnas, declined to immediately comment.
At today's court hearing in San Francisco, Portman told the judge that Jiau is a U.S. citizen and has known about the insider trading investigation since mid-December. She didn't attempt to flee when FBI agents arrived at her home, the lawyer said in his argument that she be released. Leung countered that Jiau is a "flight risk," and that when agents went to her house, they heard her car running in an attempt to drive off. Leung said the agents found packed luggage inside her house.
Leung said that Jiau claimed she had just returned from a trip to Asia. The prosecutor said her Asia trip took place in October, and that she had traveled to Beijing and returned through Taiwan.
The judge said that Jiau must designate her defense attorney by Jan. 3, since her assigned lawyer said she didn't qualify for indigent defense. Manhattan prosecutors have until then to ask for her to be held without bail.
The case is U.S. v. Jiau, 10-Mag.-2900, U.S. District Court for the Southern District of New York (Manhattan).