Hedge Fund Analyst Sentenced in Manhattan Federal Court for Insider Trading Scheme
|U.S. Attorney’s Office January 31, 2013|
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Jason Pflaum, a former research analyst with the hedge fund Barai Capital Management (BCM), was sentenced today to time served, followed by two years of supervised release, for his participation in an insider trading scheme in which Pflaum obtained material, non-public information (inside information) about various publicly traded companies and provided it to the head of BCM, Samir Barai. Pflaum pled guilty in December 2010 to one count of conspiracy to commit securities fraud and one count of securities fraud pursuant to a cooperation agreement with the government. He was sentenced today in Manhattan federal court by U.S. District Judge Jed S. Rakoff.
According to the information to which Pflaum pled guilty, statements made during his guilty plea proceeding, Pflaum’s testimony during the criminal trial of Winifred Jiau, and the government’s sentencing submission in his case:
From mid-2008 through October 2010, while working as an analyst for Barai, Pflaum obtained inside information about publicly traded technology companies and provided it to Barai, who then traded on it. In one example, Pflaum obtained inside information from company insiders who worked as “experts” or “consultants” for the expert network firm Primary Global Research (PGR) and provided it to Barai. BCM paid PGR a fee, and PGR in turn paid the experts to talk to Pflaum. Pflaum also facilitated the passing of Inside Information to Barai from Barai’s own network of company insiders and consultants, including Winifred Jiau, who provided details of the quarterly earnings announcement of NVIDIA Corporation and Marvell Technology Group Ltd.
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Pflaum, 39, of New York, New York, was ordered to pay a $200 special assessment fee and forfeiture in the amount of $500,000 for which he and his coconspirators are jointly and severally liable.
Jiau was convicted following a June 2011 jury trial of one count of conspiracy to commit securities fraud and wire fraud, and one count of securities fraud. She was sentenced in September 2011 to four years in prison.
Barai pled guilty in May 2011 to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, one count of wire fraud, and one count of obstruction of justice. He awaits sentencing.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Antonia M. Apps and David Miller are in charge of the prosecution.