Indian-origin man pleads guilty in insider trading case in US | india | Hindustan Times
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Indian-origin man pleads guilty in insider trading case in US

india Updated: May 28, 2011 12:51 IST

PTI
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An Indian-origin hedge fund manager in the US has pleaded guilty to his involvement in insider trading schemes and could face up to 20 years in prison.

Samir Barai, 39, a portfolio manager at two different New York hedge funds, pleaded guilty before Magistrate Judge Kevin Nathaniel Fox to one count of conspiracy to commit securities fraud and wire fraud, one count of wire fraud and one count of obstruction of justice, Preet Bharara, the United States Attorney for the Southern District of New York said.

Barai, who had been arrested on February 8 this year and charged in a criminal complaint, is scheduled to be sentenced on August 29, 2011.

He faces a maximum sentence of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense on the conspiracy count and a maximum fine of five million dollars on the securities fraud count.

In addition, Barai agreed as part of his plea agreement to forfeit the amount of proceeds obtained as a result of the offenses.

According to court documents, Barai worked as a portfolio manager at two hedge funds located in New York between 2006 and 2010.

During this time, he and his co-conspirators, including Donald Longueuil, Noah Freeman, Jason Pflaum and Winifred Jiau participated in a conspiracy to obtain material, non public information.

The inside information included detailed financial earnings about numerous public companies, including NVIDIA and Marvell Technology Group.

Often, Barai and his co-conspirators used an "expert networking" firm to communicate with and pay their sources of inside information, many of whom were employees of public companies.

They also obtained inside information from independent research consultants who communicated with employees at public companies.

In May 2008, Barai allegedly obtained from Jiau information regarding Marvell's financial results and based on that information, he caused his hedge fund to execute trades in Marvell, realising trading gains of more than 800,000 dollars.

Barai also had regular conference calls with Longueuil and Freeman who worked at other hedge funds, during which they shared the information they learned with each other.

During the course of the insider trading scheme, Barai destroyed documents and electronic records in connection with the scheme.

As he admitted at the plea proceeding, after learning about a federal investigation into insider trading, Barai directed his research analyst to destroy electronic and hard copy documents relevant to the investigation.

Apart from Barai, Son Ngoc Nguyen, an employee in the finance department of NVIDIA Corporation pleaded guilty to charges arising out of his involvement in separate insider trading schemes.

Nguyen, 39, of California, pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud.

This count carries a maximum sentence of five years in prison.

Nguyen also faces a maximum fine of $250,000, or twice the gross gain or loss from the offense on the conspiracy count.

He is scheduled to be sentenced on November 29, 2011.