The U.S. authorities have made their first arrest in a far-reaching insider trading probe today. U.S. Attorney Preet Bharara and the FBI announced today that “expert network” operator and reputed fun person Don Ching Trang Chu has been arrested in a conspiracy beef. Mr. Chu works for Primary Global Research, a so-called expert-networking firm. From MarketWatch, via Zero Hedge:
Chu has been charged with conspiring to promote the firm’s consultation services by arranging for insiders at publicly-traded companies to provide inside information to the firm’s hedge fund clients for the purpose of executing profitable securities transactions, they said. Chu was scheduled to depart to Taiwan on Nov. 28, they noted.
Reuters reports, meanwhile, that Mr. Chu facilitated hedge-fund tipoffs of information on Altheros Communications, Broadcom and Sierra Wireless. Mr. Chu is accused of passing information along to Richard Choo-Beng Lee an ex-hedge fund employee and one of the many people to plead guilty in last year’s massive Galleon hedge fund insider trading case.
According to Primary Global’s website (slogan: “Generate Alpha”) Mr. Chu is “PGR’s bridge to Asia experts and data sources,” and boasts 25 years of experience in the communications industry, 10 years’ experience at Bell Labs and “deep connections” in the tech industry. Also:
Finally, Don is just a fun person to travel with on the highways and byways of Taiwan.
Expert networks are playing a major role in the “wide-net” insider trading probe currently under way. At issue is the aggregation of small, seemingly insignificant nonpublic data points about companies — the stock in trade of expert networks and other analysts that cater to the financial sector. This week’s sweeping probe opens up the question as to whether it’s illegal to trade on this nonpublic information should enough be accumulated to constitute something “material.”
The insider-trading probe has this week wracked the financial industry, as three big hedge funds were subjected to FBI raids on Monday. Government inquiries and subpoenas spread to big-name firms like Steven A. Cohen’s SAC Capital, giant mutual fund Janus and $598 billion asset manager Wellington on Tuesday.
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