Inside out
Just a year or so after the Galleon Group scandal, in which a giant hedge fund was accused of running a network of insiders to give it an illegal advantage in speculating on the fortunes of companies like Intel, AMD and IBM, the US tech sector has once more found itself at the centre of an insider dealing probe.
Several media, such as the WSJ and Bloomberg, have reported that four people who worked at AMD, Dell, TSMC and Flextronics, respectively, have been arrested, together with a former VP at Primary Global Research as part of an insider dealing investigation.
It's alleged that the four insiders were employed as ‘expert consultants' by Primary, but crossed the line. "The information trafficked by the four 'consultants' went way beyond permissible market research, it was insider information." said Janice Fedarcyk, the FBI director in charge of the case, to the WSJ.
One of the people arrested was Tony Longoria, a former AMD employee, who has been charged with wire fraud and conspiracy to commit securities fraud. He worked at AMD from January 2007 and resigned last October. Having had very senior employees associated with the Galleon scandal, AMD has been very quick to try to clear its name in this case.
"AMD has been cooperating with the U.S. attorney's office and will continue to do so," said a statement. "AMD has a clear and comprehensive policy regarding insider trading and a worldwide insider trading training program. 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."
UPDATE - 10:15, 17 December 2010: The WSJ has published the full legal complaint.
