Former Technology Company Insiders Sentenced in Manhattan Federal Court for Insider Trading
|U.S. Attorney’s Office July 01, 2013|
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Mark Anthony Longoria, a former employee of Advanced Micro Devices (AMD) and a consultant for the expert networking firm Primary Global Research (PGR); and Walter Shimoon, a former employee of Flextronics International Ltd. (Flextronics) and also a consultant for PGR, were each sentenced today to time served plus two years of supervised release for their participation in insider trading schemes during which they provided material, non-public information (inside information) obtained from their employers to certain PGR clients who were money managers. In addition, Shimoon also provided inside information to John Kinnucan, who operated a research firm and then provided the information to certain money managers.
Longoria pled guilty pursuant to a cooperation agreement in June 2011 to one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, one count of securities fraud, and one count of false statements. Shimoon pled guilty pursuant to a cooperation agreement in July 2011 to two counts of conspiracy to commit securities and wire fraud and one count of securities fraud. Longoria and Shimoon were sentenced today in Manhattan federal court by U.S. District Judge Jed S. Rakoff.
According to the informations and statements made during the defendants’ plea proceedings and sentencings:
From 2007 and 2010, Longoria worked as a supply chain manager at AMD, a company that produced microprocessor chips. While employed at AMD, Longoria engaged in consultation calls with PGR employees and clients. For two quarters in 2009, he provided top line revenue and gross margin information for AMD during some of these calls. Throughout the period, he also routinely provided average sales prices and product sales figures for all the company’s product lines. For example, between July 2008 and November 2009, Longoria provided AMD inside information to a hedge fund located in New York, New York (the “New York hedge fund”), that executed securities transactions, based in whole or in part, on Longoria’s information. The New York hedge fund earned approximately $2 million in profits using Longoria’s information. In 2006, in connection with a separate but related scheme, Longoria also provided confidential business information concerning the business of Western Digital to PGR employees and its clients in his capacity as a PGR consultant.
From 2008 to 2010, Shimoon worked as a director of Business Development at Flextronics, a technology company that designed, engineered, and manufactured electronics products. During that time, Shimoon obtained confidential information, including inside information, concerning Flextronics; customers of Flextronics, including Apple, Inc. (Apple); and suppliers of Flextronics, including OmniVision Technologies Inc. (OVTI). Shimoon then provided this information to employees and clients of PGR and to Kinnucan. For example, Shimoon provided inside information concerning OVTI’s revenues to an employee of a hedge fund located in White Plains, New York. The hedge fund subsequently executed securities transactions in OVTI and earned profits of over $750,000. On another occasion, Shimoon disclosed to Kinnucan and, separately, to a cooperating witness who claimed to represent a PGR client that Apple would be launching a new iPhone in 2010 that would contain two cameras. The cameras would give iPhone users the ability to videoconference, which was a significant enhancement over prior generations of the iPhone. Shimoon knew that disclosure of this and other information violated fiduciary duties he owed to Flextronics, and/or violated non-disclosure agreements executed between Flextronics and Apple. PGR paid Shimoon approximately $18,000 for the consultation services he provided to PGR clients from mid-2008 to 2010, and Kinnucan paid Shimoon approximately $27,500 for providing confidential information, including inside information.
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In addition to the terms of supervised release imposed, Longoria, 46, of Round Rock, Texas, was sentenced to forfeiture of $170,000 and a $400 special assessment. Shimoon, 41, of San Diego, California, was also sentenced to forfeiture of $45,500 and a $300 special assessment.
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. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
The cases are being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Antonia M. Apps and Katherine Goldstein are in charge of the prosecutions.