SEC OBTAINS FINAL JUDGMENTS AGAINST BARAI CAPITAL MANAGEMENT AND OTHERS

 

The following excerpt is from the SEC website:

January 25, 2012

"The SEC announced that the Honorable Jed S. Rakoff, United States District Judge, United States District Court for the Southern District of New York, entered a Final Judgment on Consent as to Noah Freeman on December 23, 2011, and entered Final Judgments on Consent as to Bob Nguyen, Samir Barai and Barai Capital Management on January 23, 2012, in the SEC's insider trading case, SEC v. Mark Anthony Longoria, et al., 11-CV-0753 (SDNY) (JSR).

This case alleges insider trading by ten individuals and one investment adviser entity, all of whom are consultants, employees, or clients of the so-called "expert network" firm, Primary Global Research LLC ("PGR"). The SEC filed its Complaint on February 3, 2011, charging two PGR employees and four consultants with insider trading for illegally tipping hedge funds and other investors. On February 8, 2011, the SEC filed an Amended Complaint, charging a New York-based hedge fund and four hedge fund portfolio managers and analysts who illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants. The scheme netted more than $30 million from trades based on material, nonpublic information about such companies as Advanced Micro Devices, Seagate Technology, Western Digital, Fairchild Semiconductor, and Marvell Technology Group Ltd. The charges were the first against traders in the SEC's ongoing investigation of insider trading involving expert networks.

The SEC alleged that Nguyen was a PGR employee who facilitated the transfer of material nonpublic information from PGR consultants to PGR clients and, in certain instances, acted as a conduit by receiving material nonpublic information from PGR consultants and passing that information directly to PGR clients. The SEC also alleged that Freeman, Barai and Barai Capital were among the recipients of the material nonpublic information supplied by PGR consultants and employees, and either traded on the information or directly or indirectly caused hedge funds they managed or were otherwise affiliated with to trade based on the information.

The Final Judgment entered against Freeman: (1) permanently enjoins him from violations of Section 10(b) of the Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5; and (2) orders him liable for disgorgement of ill-gotten gains of $833,480, together with prejudgment interest of $180,548, for a total of $1,014,028. Based on Freeman's agreement to cooperate with the SEC, the Commission did not seek a civil penalty. In addition, on January 20, 2012, the Commission issued an order on consent in a related administrative proceeding that bars Freeman from association with any broker, dealer, investment adviser, municipal securities dealer or transfer agent.

The Final Judgment entered against Nguyen: (1) permanently enjoins him from violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and (2) orders him liable for disgorgement of ill-gotten gains of $190,890.04, together with prejudgment interest of $11,449.16, for a total of $202,339.20. Based on Nguyen's agreement to cooperate with the SEC, the Commission did not seek a civil penalty. In addition, Nguyen has agreed to be barred in a separate administrative proceeding from association with any broker, dealer, investment adviser, municipal securities dealer or transfer agent, and from participating in any offering of a penny stock.

The Final Judgment entered against Barai: (1) permanently enjoins him from violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and (2) orders him liable for disgorgement of ill-gotten gains of $3,000,000, together with prejudgment interest of $434,225.47, for a total of $3,434,225,47. Based on Barai's agreement to cooperate with the SEC, the Commission did not seek a civil penalty. In addition, Barai has agreed to be barred in a separate administrative proceeding from association with any broker, dealer, investment adviser, municipal securities dealer or transfer agent.

The Final Judgment entered against Barai Capital: (1) permanently enjoins it from violations of Section 17(a) of the Securities Act, 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and (2) orders it liable, jointly with Barai, for disgorgement of ill-gotten gains of $3,000,000, together with prejudgment interest of $434,225.47, for a total of $3,434,225,47."