The insider-trading conspiracy trial of former Primary Global Research LLC executive James Fleishman which began today will include testimony from ex-technology executives implicated in the alleged plot, the U.S. said.
Fleishman, of Santa Clara, California, went on trial before U.S. District Judge Jed Rakoff in Manhattan on two counts of conspiracy for his role in what prosecutors say was a two- yearlong insider-trading scheme. Fleishman, who has pleaded not guilty, faces as long as 25 years in prison if convicted.
The defendant worked with “a corrupt network of insiders” at technology companies who “sold out their employers by stealing and then peddling their valuable inside information,” Manhattan U.S. Attorney Preet Bharara said at the time the charges were announced in December.
A jury was selected today to hear the case, which Rakoff said would last about three weeks. The judge directed lawyers that they would deliver their opening statements this afternoon after a lunch break.
Two men who have entered guilty pleas in the insider probe, Mark Anthony Longoria, a former Advanced Micro Devices Inc. (AMD) manager, and Daniel DeVore, a former supply manager for Dell Inc. (DELL), have agreed to testify against Fleishman, assistant U.S. attorneys Antonia Apps and David Leibowitz said.
DeVore pleaded guilty in December to wire fraud and conspiracy. Longoria pleaded guilty in June to conspiracy, securities fraud, wire fraud and making false statements to federal agents and prosecutors.
Thirteen people have been convicted in the crackdown, including 12 who pleaded guilty. Winifred Jiau, a former Primary Global consultant was convicted at trial in June of securities fraud and conspiracy for passing inside tips about Nvdia Corp. and Marvell Technology Group Ltd. (MRVL) to hedge fund managers.
Primary Global, based in Mountain View, California, links investors with industry experts at public companies. In his position as a sales manager, Fleishman was responsible for attracting new clients and arranging for fund managers to speak to consultants, the U.S. said.
He knew “that inside information would be passed by the firm consultant to the firm clients” during these sessions and participated in a scheme to pass secret tips and company information from 2008 to 2010, prosecutors said.
The conspiracy included at least five others, prosecutors said. Unni Narayanan, Primary Global’s chief executive officer, and Phani Saripella, its chief operating officer, were identified as “co-conspirators” in the insider-trading scheme, prosecutors said.
Rakoff today issued several rulings before testimony began, including barring statements Fleishman made to agents of the Federal Bureau of Investigation from coming into the case.
“Fleishman stated that he did not listen to telephone calls arranged by PGR and PGR experts,” FBI agents said in a May 2010 memo, and told agents, “that he does not believe that people he works with at PGR are breaking the law.”
Focus of Probe
Primary Global was the focus of a probe by Bharara’s office and the FBI dating back to 2008, court records show. For seven months in 2009 and 2010, five different federal judges in New York authorized wiretaps of telephone lines used by Primary Global. Rakoff has rejected a bid by Fleishman to bar the government from playing wiretaps of more than 100 calls to the company’s conference lines at the trial.
The recorded calls will corroborate the testimony of cooperating witnesses, prosecutors said, and show how Fleishman and consultants passed secret company information during these sessions.
In one instance, DeVore, a Dell employee who was working as a Primary Global consultant, provided “actual forecast unit sales numbers and pricing information for Dell desktop and notebook computers” as well as market-share information, prosecutors said.
Longoria provided “top-line revenue and profit-margin numbers for AMD for two quarters in 2009,” Apps and Leibowitz said. He also provided average sales prices for “all or substantially all of AMD’s businesses.”
“Fleishman spoke directly to one or more of the consultants and obtained inside information from them,” the U.S. said, and “facilitated, assisted or arranged for other Primary Global employees or certain clients to speak to the consultants.”
The case is U.S. v. Nguyen, 11-cr-00032, U.S. District Court, Southern District of New York (Manhattan).
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