A Primary Global Research LLC consultant facing federal insider-trading charges spoke with at least 11 hedge funds over 14 months and leaked stock tips to some of them, regulators said.
Walter Shimoon, a former Flextronics International Ltd. manager who worked as a consultant for Primary Global, was among six people sued Feb. 3 by the U.S. Securities and Exchange Commission. All six were previously arrested and two have pleaded guilty.
The SEC complaint sheds new details on the alleged insider-trading scheme at Primary Global, highlighting the scope of Shimoon’s hedge fund contacts.
“From December 2008 to January 2010, Shimoon spoke with representatives of at least 11 different hedge funds,” the SEC said in its complaint filed in federal court in New York. “Brokerage records show that the hedge funds used the inside information that Shimoon provided during these calls to trade the securities of at least Flextronics and Omnivision,” a reference to Omnivision Technologies Inc.
Others sued by the SEC include two former Primary Global employees -- James Fleishman, a former sales manager, and Bob Nguyen, an ex-technology analyst -- and three Primary Global consultants, Mark. A. Longoria, Daniel L. DeVore and Winifred Jiau. Nguyen, 32, and DeVore, 46, pleaded guilty and are cooperating with prosecutors.
Also on Feb. 3, prosecutors unsealed an indictment against Fleishman charging him with one count each of conspiracy to commit securities fraud and conspiracy to commit wire fraud.
Federal investigators are probing what they say are leaks of inside information from employees of public companies who also moonlighted as consultants for Mountain View, California-based Primary Global. Their tips allegedly helped investors reap at least $5.9 million in illegal profits, the SEC said.
In its complaint, the SEC said Shimoon, 39, provided tips to Nguyen about Flextronics and its customers including Apple Inc., Omnivision and Research in Motion Ltd. Nguyen and Fleishman allegedly made summaries of Shimoon’s tips available to Primary Global clients. Shimoon also held four to six calls a month with Primary Global clients, in which he provided similar tips, the SEC said.
The agency doesn’t identify the hedge funds.
On Nov. 23, 2009, “Shimoon had a 42-minute call with the analyst at Hedge Fund No. 2 during which Shimoon conveyed material nonpublic information” about Apple, according to the complaint.
Shimoon’s lawyer, Henry Mazurek, didn’t immediately return a call seeking comment.
Elsewhere, the SEC refers to an unidentified hedge fund that allegedly got tips from Longoria, 44. The SEC said Longoria had “regular communications” with an analyst at that hedge fund and a research analyst and portfolio manager at another hedge fund.
Longoria’s lawyer, Jonathan Marks, didn’t immediately return a call. Jiau’s lawyer, Frederick Hafetz, declined to comment.
The case is Securities and Exchange Commission v. Longoria, U.S. District Court, Southern District of New York (Manhattan).