Ex-Altera Executive Pleads Guilty to Passing Insider Tips
(Corrects defendant’s title provided by a law enforcement official in second paragraph in story published Sept. 4.)
A former Altera Corp. (ALTR) executive pleaded guilty to passing illegal tips about his company and Nvidia Corp. (NVDA), some which were relayed to a group of fund managers accused of running an insider-trading “criminal club.”
Hyung Lim, 46, pleaded guilty today to conspiracy to commit securities and wire fraud before U.S. District Judge Richard Sullivan in Manhattan. Lim was a product marketing manager at Altera, according to the company. Lim later worked at Broadcom Corp. (BRCM) from 2008 to 2011 and is cooperating with the government, his lawyer, James T. Reilly, said in court.
Lim told Sullivan that he got information about Nvidia from an unidentified friend who worked in the technology company’s accounting department. He told the judge he then passed the Nvidia tips to Danny Kuo, a former investment adviser who worked at Whittier Trust Co. in South Pasadena, California. Lim also admitted to passing inside information about Altera to Kuo from about 2005 until early 2008.
“On a number of occasions, and at my request, this friend provided to me material, nonpublic information concerning Nvidia,” Lim said. “When I did this, I knew that Kuo wanted the Nvidia information so that others could trade Nvidia stock.”
“In return for providing this information to Kuo, I received cash and other items of value from Kuo, including material nonpublic information concerning other publicly traded technology companies, which I used to trade on my own account,” Lim said.
Kuo pleaded guilty in April to securities fraud and conspiracy, admitting he passed inside information about Nvidia to fund managers. He’s cooperating with federal prosecutors in the office of Manhattan U.S. Attorney Preet Bharara.
Lim will testify at the upcoming trial of Anthony Chiasson, a former Level Global Investors LP co-founder; Jon Horvath, a former technology analyst at SAC Capital Advisors LP’s Sigma Capital Management LLC; and ex-Diamondback Capital Management LLC portfolio manager Todd Newman, Reilly said after court. That trial is scheduled to begin before Sullivan on Oct. 29.
The U.S. Securities and Exchange Commission today filed a civil complaint alleging that Lim passed material nonpublic information about Nvidia to Kuo. Kuo in turn passed the information to fund managers and analysts at Diamondback Capital and Level Global, the SEC said.
When the case against the fund managers was announced in January, federal authorities described the insider-trading ring, which involved five different hedge funds and investment firms, as the largest to date involving a single stock. The illegal profits earned as a result of the scheme were almost of the same magnitude as those proven in the Galleon Group LLC insider- trading scheme, Bharara said.
Kuo used the information he obtained from Lim to benefit his hedge fund, the SEC alleged. Kuo’s fund earned or avoided trading losses of at least $90,000, the SEC alleged. Diamondback reaped profits of at least $73,000 while Level Global made profits and avoided losses of at least $15.9 million, the SEC said in the complaint.
Kuo also passed Lim’s tips to other investment professionals including Newman, Jesse Tortora, a Diamondback analyst, and Spyridon “Sam” Adondakis, a Level Global analyst.
Prosecutors alleged in their insider-trading case against Chiasson, Newman and Horvath that Tortora, Horvath and Adondakis were friends who often shared nonpublic information they received.
Adondakis and Tortora pleaded guilty last year to securities fraud and conspiracy and are cooperating with Bharara’s office.
Chiasson, Horvath and Newman have all pleaded not guilty to the charges. Greg Morvillo, a lawyer for Chiasson, John Nathanson, a lawyer for Newman, and Steve Peikin, a lawyer for Horvath, declined to comment on Lim’s guilty plea.
Roland Riopelle, a lawyer for Kuo, declined to comment on Lim’s statements in court.
The SEC said today Kuo became friends with Lim after attending poker parties organized by a mutual friend. He compensated Lim for the illicit Nvidia tips with nonpublic information about other technology companies and also paid Lim’s gambling debts, the SEC said. Kuo once wired $5,000 to a Las Vegas casino to pay Lim’s debt and later made two cash payments of $5,000 each to Lim, the SEC alleged in its complaint.
Lim’s plea agreement unsealed late today indicates that he also “provided confidential business information pertaining to Broadcom Corporation to an analyst at an investment wealth management firm,” and that Lim had also personally traded on inside information related to Nvidia, Wind River Systems Inc. and McAfee Inc.
Lim, who worked at Altera from 1990 to March 2008, faces a maximum of 25 years in prison for both counts, Sullivan said today. No sentencing date was set and Lim was allowed to remain free on $100,000 bond. Sullivan ordered Lim to surrender all travel documents and remain in the continental U.S.
Altera, based in San Jose, California, designs, makes and markets semiconductors that can be reprogrammed after they’ve been installed in electronic devices. Santa Clara, California- based Nvidia is also a chipmaker.
The conspiracy count against Lim covers the Nvidia tips, while the wire fraud count stems from the material nonpublic information about Altera that he admitted passing.
Sue Martensen, an Altera spokeswoman, didn’t immediately return a voice-mail message left at her office seeking comment on Lim.
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