A former Yahoo! Inc. (YHOO) executive and a former mutual fund manager at a unit of Ameriprise Financial Inc. (AMP) pleaded guilty to insider trading and resolved civil complaints by federal securities regulators, the U.S. said.
Robert W. Kwok, Yahoo’s senior director of business management, gave illegal tips to Reema D. Shah, a portfolio manager at the Ameriprise unit, RiverSource Investments LLC, about Yahoo’s quarterly earnings and potential transactions with outside companies, Preet Bharara, U.S. Attorney for Manhattan, said in an e-mailed statement.
Shah’s firm managed billions of dollars in mutual funds and a hedge fund, and traded on Kwok’s information, according to the statement. Kwok and Shah also yesterday settled related civil cases against them brought by the U.S. Securities and Exchange Commission.
In exchange for the inside information, Shah gave Kwok information about potential business transactions of other publicly traded companies, Bharara said. Kwok, 36, of Danville, California, and Shah, 40, of Menlo Park, California, both pleaded guilty to conspiracy to commit securities fraud, according to the statement. Kwok’s sentencing is scheduled for Sept. 18 and Shah’s is set for May 24, Bharara said.
“Kwok and Shah played a game of you scratch my back and I’ll scratch yours,” Scott W. Friestad, an SEC lawyer, said in an e-mailed statement. “When corporate executives and mutual fund professionals misuse their access to confidential information, they undermine the integrity of our markets and violate the trust placed in them by investors.”
Penalties in the SEC case and disgorgement will be determined later by a court, the agency said in a statement. Kwok and Shah are permanently barred from serving as officers or directors at public companies, according to the statement.
Neither Kwok nor Shah could be reached at their home phone numbers for comment.
Laura Birger, a lawyer representing Kwok, and Ted Cassman, an attorney for Shah, didn’t immediately return calls seeking comment on the pleas yesterday.
The cases are U.S. v. Shah and Kwok and Securities and Exchange Commission v. Shah and Kwok, U.S. District Court, Southern District of New York (Manhattan).
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