A consultant and former intern at Doug Whitman’s hedge fund testified an insider-trading trial that he shared inside information with his ex-boss, who he said was a mentor and a friend.
Wesley Wang, who worked Sigma Capital, a division of SAC Capital Advisors LP, and Trellus Management Co. after leaving Whitman Capital LLC in 2002, told jurors yesterday in Whitman’s trial in Manhattan that the two exchanged tips on Cisco Systems Inc., Polycom Inc. and Marvell Technology Group Ltd. Wang has pleaded guilty and is cooperating with the government.
Prosecutors played wiretapped recordings and displayed instant messages in which Wang and Whitman discuss stocks and their sources of allegedly confidential information about companies.
“Please stay quiet about it,” Wang said in a series of instant messages to Whitman about information Wang testified he had provided about Cisco Systems. “I’m getting paranoid. OK? Just do what you need to do but don’t tell anyone.”
Wang’s testimony bolstered some allegations made earlier in the trial by the government’s other cooperating witnesses, Karl Motey and Roomy Khan, both of whom have also pleaded guilty.
Prosecutors claim Khan passed tips to Whitman on Google Inc. and Polycom. Motey allegedly gave Whitman inside information on Marvell. Whitman is charged with making almost $1 million for his hedge fund from trading on the tips.
Whitman denies wrongdoing in the case, claiming he traded on information he believed to be legitimate research.
Wang pleaded guilty last month to two counts of conspiracy to commit securities fraud. Facing as much as 10 years in prison, he told jurors he’s cooperating in the hope that he’ll be treated more leniently when he’s sentenced.
His insider trading came to a halt when he was approached by FBI agents in January 2009, he said.
In his plea hearing in July, Wang admitted passing tips to Dipak Patel, a former portfolio manager at Sigma Capital, while he worked for SAC Capital from 2002 to 2005. Patel hasn’t been charged.
Jonathan Gasthalter, a spokesman for SAC Capital, declined to comment on Wang’s allegations.
Wang also said that when he worked for New York-based Trellus from 2005 to 2008 he traded inside tips with Thomas Hardin, the former analyst at Lanexa Global Management LP known as “Tipper X” in the Galleon Group LLC insider-trading case.
In his testimony yesterday, Wang said he told Whitman that Hardin was his source for information on Polycom.
Hardin, who pleaded guilty to conspiracy and securities fraud in 2010, is awaiting sentencing.
In a wiretapped conversation from January 2009, played for the jury, Wang and Whitman discussed Khan, a former Intel Corp. executive who was a key informant in the government’s insider-trading investigation, and Khan’s source for Google tips.
“Roomy had a mole there for awhile,” Whitman said in the call.
“And?” Wang asked.
“Uh, she lost the mole,” Whitman said. “The woman wanted her to take care of her for, uh, giving her the information.”
Khan testified earlier that she passed Whitman tips about Google earnings, which she got from Shammara Hussain, a former employee of Market Street Partners, an investor relations firm that worked with the search engine company. Khan said that Whitman advised her not to pay Hussain unless she wanted to “share the jail cell” with her.
Khan, who testified for more than two days this week, broke down in tears on Aug. 8 as she told jurors that she “lied a number of times” and made decisions that “were really wrong.”
On cross-examination, Khan was questioned about a civil lawsuit in which her former live-in maid claimed she was paid less than minimum wage. In the January 2009 wiretap, Wang appeared to refer to that incident.
“She doesn’t pay her maid,” Wang said in the recording. “How’s she going to pay the contacts? That’s hilarious.”
The case is U.S. v. Whitman, 12-cr-00125, U.S. District Court, Southern District of New York (Manhattan).