Analysis: Insider trading defendants in prime time to deal
By Dan Levine
(Reuters) - Four men arrested earlier this month for sharing confidential corporate information may have a window to negotiate favorable terms with U.S. prosecutors before they are formally indicted, legal experts say.
The insider trading case stems from an investigation of more than two years, with recent arrests focused on the use of so-called "expert network" firms that connected hedge funds with employees at various technology companies.
Federal authorities raided three hedge funds in November, but none of the recent arrests involved employees of those funds.
Another woman, Winifred Jiau, appeared in court on Wednesday accused of leaking secrets about technology companies to two hedge funds. Her lawyer was not immediately available to comment.
The prosecution of the four men is soon expected to play out in a New York federal court. Walter Shimoon, a former Flextronics employee accused of leaking secrets about Apple's iPad ahead of launch, is scheduled to make his first appearance in U.S. District Court in Manhattan on January 4, his lawyer, Jeremy Warren, told Reuters this week.
When charges were unveiled on December 16, the four individuals were charged by way of criminal complaint, which is usually followed by a grand jury indictment. Federal law sets a 30-day deadline for prosecutors to file an indictment after an arrest, but that can be waived if both sides agree, Warren said.
That means if a defendant wants to cooperate, he can negotiate with prosecutors to avoid being indicted on more serious charges, said Roger Fairfax, an associate professor at George Washington University Law School and a former federal prosecutor.
"I do think that there is generally more flexibility prior to indictment, and informal discussions between prosecutors and defense attorneys typically take place," Fairfax said.
Prosecutors generally value cooperation against targets deemed more valuable than the cooperator himself, said William Keane, a San Francisco defense lawyer and former federal prosecutor.
But once a case proceeds toward trial, the government usually offers less favorable terms, said Paul Butler, also a professor at George Washington and a former federal prosecutor.
"The more work the government has to do, the less incentive there is to offer an accused person a good deal," Butler said.
As of this week Shimoon has not been in any plea negotiations, Warren said.
James Fleishman, who is on leave from his sales job at the California-based expert network firm Primary Global Research, appeared before a federal magistrate in San Jose on Wednesday and was allowed to remain free on bond. His first appearance in a Manhattan federal court was also set for January 4.
Fleishman declined to comment outside court.
Brad Bailey, who represents Manosha Karunatilaka, said he expected his client to appear in New York sometime in January. Karunatilaka is accused of passing secrets from his work at Taiwan Semiconductor Manufacturing Company.
Bailey declined to comment further on the case.
Prosecutors allege Mark Longoria shared information about Advanced Micro Devices. Longoria's lawyer did not return a call for comment.
A spokeswoman for the U.S. Attorney's office in Manhattan declined to comment.
The investigation comes as the U.S. Department of Justice, which has failed to win any major convictions tied to the 2008 financial crisis, is trying to flex its muscles in prosecuting Wall Street crime.
At least one of the accused, Karunatilaka, was approached by agents from the Federal Bureau of Investigation prior to his arrest in a bid to secure his cooperation, a source familiar with the matter said.
But Shimoon didn't know of the investigation until federal agents pounded on the door while his wife was in the shower, said his lawyer Warren.
"This was completely out of the blue," Warren said.
(Reporting by Dan Levine; Editing by Gary Hill)
Credit: Reuters (www.reuters.com)
No comments:
Post a Comment