Former Marvell Technology Employee Ng Charged in Nationwide Insider Probe
By Bob Van Voris – Aug 11, 2011 12:01 AM ET
U.S. prosecutors charged former Marvell Technology Group Ltd. (MRVL) accountant Stanley Ng with conspiracy as part of a nationwide probe of insider trading involving so-called expert networking firms.
Ng, 42, provided material non-public information to Winifred Jiau, a former consultant with expert-networking firm Primary Global Research LLC, according to a criminal complaint filed Aug. 5 and made public yesterday in federal court in New York.
Ng was arrested at his home and appeared yesterday before U.S. Magistrate Judge Bernard Zimmerman in San Jose, California, according to a statement by U.S. Attorney Preet Bharara in New York. Ng was released on a $50,000 bond secured by his home in Cupertino, California, and is scheduled to appear Aug. 26 in court in Manhattan. He faces as long as five years in prison if convicted.
Jiau, 43, was convicted in June of one count each of conspiracy and securities fraud for passing earnings and other information about Nvidia Corp. (NVDA) and Marvell 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.
Barai and Freedman have pleaded guilty and are cooperating with prosecutors.
Prosecutors claimed that Ng and Sonny Nguyen, 39, then an employee in Nvidia Corp.’s finance department, were recruited into an “investment club” with Jiau, where they agreed to give her inside information about their companies. Nguyen has pleaded guilty.
Jiau gave the two men gifts and bought them meals at the Cheesecake Factory and other restaurants, according to the complaint. In May 2008, Barai sent Jiau an e-mail asking for the “M cookbook recipe,” referring to Marvell’s non-public earnings information, according to the government. Based on information from Ng, Jiau told Barai that the company’s earnings per share exceeded analyst expectations by as much as six cents, according to the complaint.
Three months later, Barai asked Jiau again for the “M recipe,” or information on Marvell’s new quarterly earnings, according to the complaint. Marvell, based in Santa Clara, California, makes chips for personal computers and mobile phones.
Jiau explained to Barai her reluctance to call Ng too often.
“Sorry. My cook feels like he is watched,” she told Barai in an instant message, the government said.
Expert networking firms such as Primary Global, based in Mountain View, California, link investors with industry experts at public companies.
Jiau was the first of the so-called expert networkers to go to trial. The U.S. has charged at least 15 people, including consultants and fund managers, with insider trading in the investigation of expert networking firms. At least 12 people have pleaded guilty in the investigation. James Fleishman, a former Primary Global sales manager, is scheduled to be tried later this month.
Galleon Group LLC co-founder Raj Rajaratnam was convicted May 11 of directing the largest hedge fund insider-trading ring. Prosecutors are seeking a prison sentence of as long as 24 years and five months for Rajaratnam. Ex-Galleon trader Zvi Goffer was convicted with two others June 13 on related charges and faces as long as 20 years on the most serious counts.
Jurors at Jiau’s trial saw evidence of Barai’s fund buying hundreds of thousands of shares of Marvell stock in May 2008 after obtaining information Jiau allegedly got Ng, who worked as an accountant for Marvell and allegedly tipped her about the company’s earnings in May 2008.
Prosecutors showed the jury evidence that Jiau had also worked at Nvidia briefly in 2007. She befriended both Nguyen and Ng to get her the information she then sold to Barai and Freeman.
Ng was hired by Marvell in 2002 to be the company’s SEC reporting manager, according to the complaint. He had access to the company’s financial records and regulatory filings before they became public, according to the government.
Ng was placed on administrative leave by Marvell in January after he refused to cooperate with an internal investigation, according to court records.
The case is U.S. v. Ng, 11-02096, U.S. District Court, Southern District of New York(Manhattan).
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