June 8 (Bloomberg) -- Former Primary Global Research LLC consultant Don Ching Trang Chu pleaded guilty and admitted helping employees of public companies pass confidential information to the expert networking firm’s hedge fund clients.
Chu, 57, pleaded guilty to conspiracy to commit securities fraud and conspiracy to commit wire fraud in a hearing yesterday before U.S. District Judge Jed Rakoff in New York.
Chu worked as the Taiwan liaison for Mountain View, California-based Primary Global before he was arrested in November. He told Rakoff that inside information was shared with former SAC Capital Advisors LP portfolio manager Noah Freeman and Sam Barai, founder of Barai Capital Management LP.
“I occasionally was present for in-person meetings in Taiwan between PGR clients and PGR consultants during which some of the PGR consultants disclosed to the PGR clients material, non-public information,” Chu said, reading from a statement. “I understood that the PGR clients intended to use that information in connection with the purchase or sale of securities by the hedge funds for which they worked.”
Barai and Freeman both have pleaded guilty.
Chu was accused in connection with one of three alleged overlapping insider-trading rings that included Galleon Group LLC co-founder Raj Rajaratnam. Prosecutors said Chu facilitated a conversation in July 2009 between Richard Choo-Beng Lee, a former partner at San Jose, California-based Spherix Capital LLC, a Primary Global client, and an unidentified employee of a publicly traded technology company.
Cooperating With Government
Lee pleaded guilty and is cooperating with the government along with his partner, Ali Far.
Chu signed an agreement with prosecutors yesterday that requires him to cooperate with their investigation, according to the judge.
The government and Chu’s lawyer, James DeVita, agreed that federal guidelines call for Chu to get as much as six months in prison. Rakoff, who may disregard the guidelines, told Chu he faces as long as 25 years in prison when he’s sentenced Sept. 7.
Prosecutors told Rakoff in April that they had extensive discussions with Chu about a possible guilty plea.
The case is U.S. v. Chu, 1:11-cr-00032, U.S. District Court, Southern District of New York (Manhattan).
--With assistance from Patricia Hurtado in New York. Editors: Mary Romano, Peter Blumberg
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