SAC Fund Manager’s Tipper Nguyen Gets One Year in Prison
An expert-networking consultant who leaked illegal tips to former SAC Capital Advisors LP fund manager Noah Freeman and other portfolio managers was sentenced to a year and a day in prison.
The term imposed yesterday for Tai Nguyen by U.S. District Judge Naomi Reice Buchwald in New York is almost four years shorter than the sentence sought by prosecutors, who argued that Nguyen corruptly used his sister, then an employee at Abaxis Inc. (ABAX), to give him nonpublic information which he then sold to fund managers including Freeman, Barai Capital Management LP founder Samir Barai and others from 2006 to mid-2009.
Nguyen’s lawyer asked that the prison term be less than the 2 1/2 years recommended by probation officials, saying Nguyen was a refugee from Saigon, Vietnam, who emigrated with his family to the U.S. in 1975.
The judge ordered Nguyen to surrender to U.S. Bureau of Prison authorities by May 1.
“The law teaches to impose a sentence which is sufficient, but not greater than necessary,” Reice Buchwald said. “Apart from the history of the life of Mr. Nguyen, I accept his sincere remorse for the unusually severe consequences that his crime caused his family, and here it is an extended family bearing the consequences.”
Nguyen, 50, said his crimes destroyed his relationship with his siblings and that his sister was fired from her job.
‘I am ashamed to be here, ashamed to be sentenced,’’ Nguyen told Reice Buchwald in court yesterday. “It’s a relief to me that my parents are not alive to see me today.”
He said he decided to use his sister for the illegal tips because he had lost an earlier job and was desperate to continue having Freeman and Barai as his customers.
“When I lost my job, my best customers were Sam and Noah,” Nguyen said. “They were always asking me for the best information. I was wrong. Sam and Noah made money on my recommendations in the past. But they were not satisfied. They wanted an edge.”
Prosecutors had argued that Nguyen, president of Insight Research LLC, deserved as long as 57 months in prison. The U.S. said Nguyen fed tips to Freeman when he was working as a fund manager at Sonar Capital Management LLC and continued after he joined SAC. Barai and Freeman and their funds earned about $6.2 million as a result of the insider-trading scheme, according to prosecutors.
“He conspired with talented portfolio managers who were privileged to have graduated from this country’s best schools,” Assistant U.S. Attorney David Miller said in court papers. “Together, they attempted to cheat the system and gain an unfair advantage over the average investor.”
“The defendant’s sister was in a position to get extremely good information about Abaxis and provide it to Noah Freeman and Samir Barai for a period of years, and which resulted in a significant windfall for them,” Miller said. “This was not aberrant behavior, this took place over a long period of time. This was not a one-off.”
Nguyen’s lawyer, David Wikstrom, identified Nguyen’s source of inside information as his sister, whom he didn’t name.
‘Weight of Punishment’
“If there is ever a person in court who felt the weight of punishment and is significantly deterred, it is my client,” Wikstrom said. “I ask the court to be gentle with him.”
The U.S. Securities and Exchange Commission, in a related lawsuit against Nguyen, said his sibling reported directly to the company’s chief financial officer and that her duties included calculating the company’s quarterly revenue.
Nguyen pleaded guilty in June to a count of conspiracy to commit securities fraud and wire fraud by passing material nonpublic information about companies. Nguyen said he passed the illegal tips to Freeman and Barai and other fund managers. The SEC alleged Nguyen that reaped $145,000 by trading in Abaxis in his own personal account.
Nguyen agreed to forfeit $400,000 to the U.S. as part of his sentence.
The case is U.S. v. Nguyen, 12-cr-00495, U.S. District Court, Southern District of New York (Manhattan).
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