Bloomberg News

Expert-Networker Jiau Gets Four Years for Insider Trading

September 21, 2011

(Updates with prosecutor’s remarks in eighth paragraph.)

Sept. 21 (Bloomberg) -- Winifred Jiau, a former consultant at Primary Global Research LLC, was sentenced to four years in prison for selling inside information on technology companies to fund managers who made millions of dollars trading on the tips.

U.S. District Judge Jed Rakoff, who presided over Jiau’s jury trial, handed down the sentence today in Manhattan. Rakoff said he would impose a forfeiture order of $3.12 million. Jiau, a naturalized U.S. citizen born in Taiwan, has been in custody since her arrest in December.

Jiau, 43, of Fremont, California, was convicted in June of one count each of conspiracy and securities fraud for passing earnings and other information about Nvidia Corp. and Marvell Technology Group Ltd. to hedge fund managers Noah Freeman, a former SAC Capital Advisors LP portfolio manager, and Samir Barai, founder of New York-based Barai Capital Management LP.

“I’m truly sorry for being here,” Jiau said today in court. She apologized to her family and friends as well as to her golden retriever, Hunter: “I’m sorry I broke my promise to take care of you and be with you.”

Primary Global, based in Mountain View, California, is an expert-networking firm that matches investors with specialists who provide insight into specific markets. A fund manager testified Jiau worked with him and a group of friends under an agreement in which Primary Global paid her $10,000 a month and they had exclusive access to her confidential information.

Fifteen Charged

Since November, 15 people have been charged with insider trading by Manhattan U.S. Attorney Preet Bharara’s office in a nationwide crackdown on so-called expert-networking consultants at technology companies who gave fund managers confidential information. Twelve defendants have pleaded guilty and former Primary Global executive James Fleishman was convicted by a jury yesterday.

The U.S. sought a prison term of eight to 10 years. Assistant Manhattan U.S. Attorney Avi Weitz said Jiau failed to show any remorse or any charitable works.

“You see a self-interested individual who did what she needed to make money,” Weitzman said.

Jiau’s lawyer, Joanna Hendon, said her client deserved a term similar to the 18 months Rakoff imposed on a co-defendant in the expert-networking investigation.

‘Can’t Ignore’

“There are certain things the court can’t ignore,” Rakoff said. “This was a serious crime, going to the integrity of the financial markets, engaged in for a period of up to two years. That alone requires some meaningful sentence.”

Still, Rakoff criticized federal sentencing guidelines for their “arithmetic certainty” and rejected the 78 to 97 months the guidelines suggested in favor of a shorter prison term.

Zvi Goffer, a former trader at Galleon Group LLC, was sentenced today to 10 years in prison for an insider trading scheme involving tips about pending deals from lawyers. Galleon co-founder Raj Rajaratnam, the center of a crackdown on insider trading at hedge funds, is set to be sentenced on Oct. 13 after being convicted in May.

Prosecutors said Jiau befriended and recruited a Marvell accountant and an Nvidia analyst who gave her confidential earnings information that she shared with Freeman and Barai during consulting sessions with Primary Global, which links investors with industry experts at public companies.

Nvidia Earnings

Sonny Nguyen, a former Nvidia financial analyst who pleaded guilty and is cooperating with the U.S., testified at Jiau’s trial. He said he gave her confidential data about the chipmaker’s quarterly earnings in August 2008. Prosecutors also presented evidence showing that Stanley Ng, a Marvell accountant, had tipped her to his company’s earnings in May, 2008. Ng, who was arrested Aug. 10, is the only person publicly charged in the probe whose case hasn’t been resolved.

Freeman testified at the trial that data Jiau provided during consulting sessions was “perfect information” for at least eight quarters. Freeman said he made from $5 million to $10 million by trading on her Nvidia information.

The case is U.S. v. Jiau, 11-cr-00161, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Peter Blumberg, Andrew Dunn

To contact the reporters on this story: Patricia Hurtado in New York federal court at pathurtado@bloomberg.net; Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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