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July 1 (Bloomberg) -- Mark Anthony Longoria, a former employee of Advanced Micro Devices Inc. charged in a U.S. probe of insider trading by fund managers and expert networking consultants, pleaded guilty to a four-year fraud scheme.
Longoria, 45, of San Antonio, yesterday admitted that while also working as a paid consultant to Primary Global Research LLC, an expert networking firm, he committed four crimes: two counts of conspiracy, a count of securities fraud and making false statements to prosecutors and FBI agents.
He faces as long as 50 years in prison, said U.S. District Judge Jed Rakoff in Manhattan. Longoria is cooperating with prosecutors, Rakoff said, and he could face a lesser term if he provides “substantial assistance” to the government.
“Between 2006 and 2010, I was a consultant with Primary Global Research, known as PGR, an expert networking firm,” Longoria told Rakoff during the court hearing. “PGR paid me for providing material nonpublic information, mostly by telephone, to its hedge fund clients. I believed at the time that the hedge funds would use the nonpublic information I gave them to make trading decisions.”
Longoria admitted in court that he passed tips about AMD’s gross margins and revenue to hedge fund managers in 2009. He also said that he provided inside information about Western Digital Corp., a hard-drive maker based in Irvine, California, when he worked for them in 2006. He said he passed the information to four hedge funds, including Barai Capital Management, whose founder Samir Barai, pleaded guilty to federal charges in May.
“During most of that period, I was employed by AMD,” Longoria said, adding that he had information about the chipmaker’s unit volumes and pricing information of its product lines.
Yesterday in court, Longoria said he conspired in the insider-trading scheme with Bob Nguyen, a former Primary Global analyst who pleaded guilty in January, and James Fleishman, a Primary Global sales manager who was charged with Longoria in December.
Longoria also named Phani Saripella, Primary Global’s chief operating officer, as a participant in the scheme. Saripella hasn’t been charged with any wrongdoing. Saripella’s lawyer, Priya Chaudhry, didn’t immediately return a voice-mail message left at her office after business hours or an e-mail message seeking comment.
“I agreed with employees of PGR, including James Fleishman, Phani Saripella, Bob Nguyen and others, and their hedge fund clients to provide such inside information to hedge funds,” Longoria said. “I knew that what I was doing was wrong,” he said.
Nguyen, a former Primary Global Analyst, pleaded guilty in January to recruiting consultants from public companies to be part of the scheme. He was described by prosecutors as a “cooperating witness with the government.”
Fleishman, who has pleaded not guilty to the charges, is scheduled to go to trial in August.
Primary Global “paid me for providing material, nonpublic information, mostly by telephone, to its hedge fund clients,” Longoria said in court. “I believed at the time that the hedge funds would use the nonpublic information I gave them to make trading decisions.”
$300 a Call
Longoria said Primary Global paid him $300 for each telephone call to pass inside information about the chipmaker to hedge fund clients of the expert networking firm. He also said he earned about $200,000 from the scheme which he said operated from 2006 to 2010.
When asked by federal prosecutors and agents with the Federal Bureau of Investigation in late 2010 and early 2011, Longoria yesterday said he lied to them, denying he paid a friend at AMD for earnings information.
“I also told them that I gave only high-level information to Steve Glass, a hedge fund manager, such as whether AMD sales were up or down each quarter, when, in fact, I gave him specific earnings numbers in advance of public announcement,” he said.
Steven Glass, a portfolio manager at STG Capital Management in New York, didn’t return voice-mail messages left at his office seeking comment after regular business hours.
Yesterday in court, Longoria identified the hedge funds which he said were recipients of his tips. He told Rakoff in court that the recipients were, “STG, Barai, Cumberland among others.”
“In 2009, I also provided AMD’s quarterly revenue and gross margin numbers in advance of AMD’s public announcements to PGR employees and clients, including Steve Glass and Gurinder of G-Core.”
Gary Tynes, a principal of Cumberland Associates Ltd. in New York, didn’t return voice-mail messages seeking comment after regular business hours. Gurinder Kalra, of G Core Capital Management in New York, also didn’t return voice-mail messages left at his office after regular business hours.
Dan Charnas, a spokesman for Primary Global, declined to comment on Longoria’s statements about the firm or Saripella.
Michael Silverman, a spokesman for AMD, said in a statement that the company was a victim of the insider trading scheme.
“AMD has a clear and comprehensive policy against insider trading, and AMD also has a worldwide insider trading training program,” he said. “AMD additionally has policies regarding work by its employees outside of AMD including consulting arrangements such as the so-called expert networks that appear to be at the heart of the government’s insider trading investigations. It appears that Mr. Longoria violated those policies.”
Steve Shattuck, a spokesman for Western Digital said in a phone interview, “We are cooperating with the government and have been advised by the U.S. Attorney’s office that W.D. is a witness and that the company and its employees are not targets.”
After court, Longoria’s lawyer, Jonathan Marks, declined to comment whether his client would testify at Fleishman’s trial.
Rakoff set sentencing for July 1, 2013, adding, “Don’t be late,” as lawyers left the courtroom.
Assistant U.S. attorneys Antonia Apps and David Leibowitz, who are prosecuting the case, also declined to comment after court.
Longoria was one of four people arrested in December in a federal probe of insider trading of hedge funds that was conducted by prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan and the FBI’s New York Office.
More than a dozen people have been charged by Bharara’s office since November, in cases tied to company employees who also worked for expert networking firms and fund managers who received their illegal tips.
Ten people have been convicted, including Winifred Jiau, a former Primary Global consultant who was found guilty on June 20. Joanna Hendon, Jiau’s lawyer, said she would file an appeal after the sentencing.
Expert networking firms match investors with specialists who provide insight into specific markets. A broader U.S. probe has implicated hedge funds, banks and insiders at technology companies.
Longoria was charged along with Fleishman, Walter Shimoon and Manosha Karunatilaka in December with fraud and conspiracy.
Karunatilaka, a former account manager at Taiwan Semiconductor Manufacturing Co., pleaded guilty in May to sharing nonpublic information about the firm with Primary Global clients.
Prosecutors have repeatedly filed requests with the court seeking adjournments in prosecuting both Shimoon and Longoria.
In court papers filed June 6, Apps sought a delay in the case of Shimoon, saying prosecutors and his lawyer “have had conversations regarding a possible disposition of this case.” Shimoon’s lawyer, Henry Mazurek, declined to comment.
The case is U.S. vs. Shimoon, 11-cr-00032, U.S. District Court, Southern District of New York (Manhattan).
--with assistance from Chris Dolmetsch in New York, Joel Rosenblatt in San Francisco. Editors: Mary Romano, Michael Hytha
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