A former Nvidia Corp. accounting manager agreed to pay $30,000 to resolve U.S. regulatory claims that his tips to a friend led to millions of dollars in illicit gains for hedge-fund traders, including Sigma Capital Management, an affiliate of SAC Capital Advisors LP.
Chris Choi, while employed by Nvidia, routinely gave his friend Hyung Lim nonpublic information about the company’s revenue and profit margin before quarterly earnings announcements, the Securities and Exchange Commission said in a complaint filed today at federal court in Manhattan.
Choi is at the center of a sprawling insider-trading ring that included insiders at technology companies and hedge-fund analysts who the U.S. says obtained and swapped confidential information for more than $72 million in illegal profits. Three portfolio managers who traded on the tips have been convicted.
“Insiders at public companies who are entrusted with confidential information are duty bound to protect it,” Sanjay Wadhwa, senior associate director of the SEC’s New York regional office, said in a statement. “Choi violated that sacred duty by regularly tipping his friend with nonpublic financial data that hedge fund traders exploited for millions of dollars in illegal profits.”
Lim relayed Choi’s information to Danny Kuo, a fellow poker player who worked at Whittier Trust Company. Kuo traded on the inside information and passed it along to analysts at other firms including Diamondback Capital Management, Level Global Investors LP, and Sigma Capital, the SEC said. Choi’s tips allowed the hedge funds to earn about $16.5 million in illicit profits or avoided losses.
Lim and Kuo have both pleaded guilty to related criminal charges. Choi, who also agreed to be barred from serving as an officer or director of a public company for five years, settled the SEC’s claims without admitting or denying wrongdoing. He hasn’t been criminally charged. Choi’s attorney Douglas Schneider declined to comment, as did Jennifer Queliz, a spokeswoman for Manhattan U.S. Attorney Preet Bharara.