Jury convicts hedge fund tipster Jiau in just hours
A jury took only 6-1/2 hours to convict former technology company consultant Winifred Jiau of insider trading charges on Monday after a trial that the panel's forewoman described as leaving her in despair about corruption at some hedge funds.
Taiwan-born Jiau -- the first consultant for firms that match business experts with hedge funds to go to trial in a U.S. crackdown on suspicious Wall Street trading -- was convicted of securities fraud and conspiracy to gain an illegal market edge for herself and her clients.
We really learned about this unfair system to see how a person's life could be changed on a dime, even a person who is not one of the big hedge fund guys, the forewoman of the 12-member jury, Susan Kohlmeyer, told reporters outside the Manhattan federal courtroom.
I hope that hedge funds will be re-examined. There's a lot of corruption. I was full of despair; I lost my appetite for three weeks, said Kohlmeyer, an art teacher from the suburbs in Westchester County north of New York City.
The jury deliberated for five hours on Friday and 90 minutes on Monday in the third trial since March as part of what federal prosecutors call the biggest probe of insider trading at hedge funds on record, punctuated by the extensive use of FBI wiretaps.
In May, a jury convicted once-high-flying Galleon Group hedge fund founder Raj Rajaratnam after a two month-long trial and on June 13, three former securities traders were convicted in an overlapping insider trading ring.
Jiau's lawyer, Joanna Hendon, told reporters after the verdict that her client would appeal. The lawyer had argued in Jiau's defense that the information she shared was not material to the trading by hedge funds.
CODED INSTANT MESSAGES
Prosecution evidence of instant messages at the nearly three week-long trial showed that Jiau referred to her sources in the finance departments of chipmakers Marvell Technology Group Ltd and Nvidia Corp as cooks, to money as sugar, and to confidential information as recipes.
The petite, bespectacled Jiau, 43, lived alone with her dog in Fremont, California, before being arrested last December. She was denied bail and faces up to 25 years in prison when she is sentenced by U.S. District Judge Jed Rakoff on September 21.
Nicknamed Wini or Poohster by her co-conspirators, Jiau was paid $208,000 over two years by so-called expert network firm Primary Global Research (PGR), the jury heard.
Prosecutors accused several people linked to firms such as PGR of breaching their fiduciary duties by trafficking in confidential, inside data.
A former executive of PGR, James Fleishman, is scheduled to go on trial in the same courtroom at the end of August.
The payments to Jiau were arranged by at least two people she tipped in advance about the chipmakers' earnings in 2008, providing precise financial information that they traded upon.
One was former SAC Capital Advisors LP analyst Noah Freeman, who pleaded guilty and testified against her. The other was Samir Barai, founder of Barai Capital Management.
SAC was not accused of any wrongdoing.
Jiau chose to fight the charges while more than a dozen others, including Barai and his former research analyst, Jason Pflaum, admitted crimes or agreed to assist the investigations in hopes of lighter sentences.
Wini Jiau gave new meaning to the concept of social networking, Manhattan U.S. Attorney Preet Bharara said in a statement after the verdict. She used and exploited friends at public companies ... Another link in a corrupt network has been broken.
A onetime friend and former Nvidia financial analyst, Sonny Nguyen, pleaded guilty and testified about how she cultivated him to leak corporate secrets. But she never told him or another friend at Marvell that she was sharing the information with hedge funds and being paid by PGR.
She provided the information to the decimal. That's unheard of. It was a very simple case, said juror Parbodh Sharma, 55, of Riverdale, New York.
The case is USA v Winifred Jiau et al, U.S. District Court for the Southern District of New York, No. 11-00161.
(Additional reporting by Jonathan Stempel, editing by Dave Zimmerman and Gerald E. McCormick)
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