March 27, 2012
SEC Obtains Final Judgment on Consent Against Winifred Jiau
The SEC announced that, on March 24, 2012, 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 Winifred Jiau in the SEC’s insider trading case, entitled 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. (“Marvell”). The charges were the first against traders in the SEC's ongoing investigation of insider trading involving expert networks.
The SEC alleged that Jiau was a consultant associated with PGR who passed material, nonpublic information regarding the quarterly earnings of Marvell to defendants Samir Barai and Noah Freeman. Barai then traded on that information and reaped over $850,000 in illegal trading profits.
The Final Judgment entered against Jiau permanently enjoins her from violations of Section 10(b) of the Exchange Act of 1934 (“Exchange Act”) and Exchange Act Rule 10b-5. The Commission separately recovered illicit trading profits from Jiau’s tippees. In a parallel criminal action against Jiau, she was ordered to pay more than $3 million in forfeiture and was sentenced to a 48-month term of imprisonment. In light of the foregoing, the Commission did not seek disgorgement or a civil penalty from Jiau in this settlement.
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