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Four arrests in insider trading investigation

December 16, 2010 |  9:36 am

Four people connected with technology companies were arrested Thursday morning as part of the government's latest push to root out insider trading in the financial industry.

One of the men arrested, James Fleishman, was an executive at Primary Global Research, one of the expert network firms that has been at the center of the government's recent push.

Expert network firms works to connect high-powered investors with employees at the companies in which they are looking to invest.

Bharara Primary Global Research, which is based in Mountain View, Calif., was also the employer of a consultant who was arrested last month as part of the investigation being conducted by the U.S. attorneys office in Manhattan. A spokesman for the company said that Fleishman has been placed on leave.

The three other men arrested Thursday -- Walter Shimoon, Mark Anthony Longoria and Manosha Karunatilaka -- all worked for publicly traded companies and served as consultants to Fleishman's firm.

Shimoon was in the San Diego offices of Flextronics International Ltd.; Longoria worked in the Texas offices of the chip-maker Advanced Micro Devices Inc., or AMD; and Karunatilaka was in the Massachusetts offices of Taiwan Semiconductor Manufacturing Co. Inc.

All are accused of passing on non-public information to Fleishman's clients, some of which were hedge funds, according to the complaint.

Shimoon’s company provided iPhone and iPod components to Apple, and Shimoon is alleged to have used this relationship to acquire privileged information about Apple that he then passed along to investors.

Prosecutors also announced Thursday that they had earlier arrested a fifth man, Daniel Devore, a former Dell Inc. employee who has already pleaded guilty and cooperated with authorities.

"Today’s charges allege that a corrupt network of insiders at some of the world’s leading technology companies served as so-called 'consultants' who sold out their employers by stealing and then
peddling their valuable inside information," Preet Bharara, the U.S. attorney in Manhattan who appears to be leading the current investigation, said in a statement.

Bharara said that the publicly-traded companies that employed the men had all cooperated with the authorities.

Before Thursday one person had been arrested in the government's recent insider-trading offensive, but prosecutors have said they are conducting a wide-ranging investigation and it has already resulted in FBI raids at three hedge funds and subpoenas being sent to several hedge funds.

-- Nathaniel Popper

 Photo: U.S. Attorney Preet Bharara. Credit: Seth Wenig / Associated Press