The US FBI has charged four men – including employees at chipset firms AMD, Flextronics and Taiwan Semiconductor Manufacturing Company (TSMC) – with trading insider information on their own companies, as well as company customers like Apple.
TMSC account manager Manosha Karunatilaka, AMD supply chain manager Mark Anthony Longoria, and Flextronics senior director of business development Walter Shimoon were each charged with wire fraud and conspiracy to commit securities fraud and wire fraud charges in connection with their employment as consultants for Primary Global Research, an expert-networking company that matches investors with specialists who provide insight into specific markets.
James Fleischman, a sales manager at Primary Global, was also arrested on wire fraud and conspiracy charges for conspiring to provide confidential information to Primary Global clients, including hedge funds.
A fifth man, Daniel Devore, a former global supply manager at computer maker Dell who also worked as a consultant to Primary Global, pled guilty to charges of wire fraud and conspiracy to commit wire fraud and securities fraud on December 10.
According to an FBI press release, the defendants were part of a scheme that operated from 2008 to early 2010. The consultants were allegedly paid over $400,000 in total to participate in phone calls with Primary Global clients, during which they supplied information that went “way beyond permissible market research”.
In many cases, the confidential information revealed exposed secrets of other technology companies, including Apple, Research In Motion, Sierra Wireless and Broadcom according to a Wall Street Journal report.
For example, according to the official complaint [PDF], Shimoon allegedly revealed Apple’s plans for the iPad and the iPhone 4 in an October 2009 phone call.
The FBI says its investigation is continuing, with plans to go after hedge funds suspected of paying for inside information, according to Bloomberg.