Sept. 14 (Bloomberg) -- An ex-Advanced Micro Devices Inc. employee told jurors that the 2009 arrest of Galleon Group LLC co-founder Raj Rajaratnam on insider-trading charges caused him to fear that he was suspected of passing tips to the hedge fund.
“I was pretty scared, pretty paranoid,” Mark Anthony Longoria, a former AMD manager told a federal court jury in New York. “I thought I was the individual giving out information that they were referring to.”
Longoria, who pleaded guilty and is cooperating with the U.S., testified yesterday at the insider-trading trial of James Fleishman, a Primary Global Research LLC executive. The Mountain View, California-based firm, also known as PGR, matches employees of public companies with fund managers for a fee.
Fleishman, of Santa Clara, California, is charged with two counts of conspiracy for his role in what prosecutors say was a scheme in which technology-company employees, working as consultants for PGR, passed secret tips to fund managers. Fleishman, who has pleaded not guilty, faces as long as 25 years in prison if convicted.
Longoria testified he gave confidential information about AMD to Fleishman and fund managers “two or three times” while moonlighting as a PGR consultant from 2006 until 2010. Longoria said he couldn’t remember when he had specifically passed this information, or say whether he had given Fleishman specific information on revenue.
Call to Fleishman
Longoria said that after he read about the arrest of Rajaratnam and five others on Oct. 16, 2009, he phoned Fleishman that day to find out if PGR did business with Galleon.
The Federal Bureau of Investigation wiretapped that call, which was played for the jury.
“Do you guys do business with Galleon?” Longoria asked Fleishman. “I wasn’t sure. I was like really getting nervous, I said ‘Man, that name sounds familiar’ and then it even said in there that they were trading AMD. And I was like ‘Oh crap!’ It made me extremely nervous. I’m like ‘God, dang it! What the hell is going on!’”
Fleishman told Longoria that Primary Global didn’t work with Galleon. “I know I can tell you point blank they are not a client,” he said.
Rajaratnam, the billionaire co-founder of Galleon, was convicted in May of 14 counts of conspiracy and securities fraud in what the U.S. said is the biggest probe of insider trading involving hedge funds. He is scheduled to be sentenced Sept. 27.
During the October 2009 recorded call, Longoria told Fleishman he feared he was the person suspected by the government of being Rajaratnam’s source on AMD. At Rajaratnam’s trial earlier this year, Anil Kumar, a former McKinsey & Co. managing director, testified he leaked information to Rajaratnam about an AMD acquisition and that the fund manager had also obtained inside information about AMD from Danielle Chiesi, a stock trader.
“I was just really freaking out when I read that,” Longoria told Fleishman during the call. “So there’s no way they can tie them back to me. Because, oh my God!”
Fleishman replied, “Hopefully this will just kind of …”
“Blow over,” Longoria said.
Longoria concluded his testimony yesterday at the trial before U.S. District Judge Jed Rakoff.
Four People Arrested
Longoria was one of four people arrested in December 2010 by federal prosecutors in New York in an overlapping insider- trading probes involving Galleon and other funds by Manhattan U.S. Attorney Preet Bharara’s office.
He pleaded guilty to conspiracy to commit securities and wire fraud, securities fraud, wire fraud and making false statements to prosecutors and FBI agents. He faces as long as 50 years in prison.
Longoria was the firm’s most popular consultant, doing hundreds of calls with clients, a former PGR manager told jurors last week.
On the wiretapped call with Fleishman, Longoria expressed concern that he had done expert networking-consultations with Spherix Capital LLC, a San Jose, California-based fund founded by Richard Choo-Beng Lee and Ali Far.
He said fellow AMD employee in the finance department who had passed information to him had mentioned a fund “Spherix” to him.
Court records that were sealed at the time show that both Lee and Far had pleaded guilty and were cooperating with the U.S. in October 2009, before Rajaratnam was arrested. The pleas were made public the next month.
Longoria testified yesterday that during his time consulting for PGR, he made as many as 600 calls with PGR clients, averaging about 200 per year, being paid $300 per call. He admitted fabricating information he passed while working as a PGR consultant and falsely billing the firm for calls he never had with fund-manager clients.
Of the 15 people charged by Bharara’s office in the expert- networking probe since November, 12 have pleaded guilty. One, Winifred Jiau, a former Primary Global consultant, was convicted at trial in June of securities fraud and conspiracy. Fleishman is the second to go to trial.
The case is U.S. v. Fleishman, 11-cr-32, U.S. District Court, Southern District of New York (Manhattan).
--Editors: Fred Strasser, Peter Blumberg
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