Expert pleads guilty in U.S. insider probe; gave illegal tips on Apple iPad, iPhone

“A former senior director at Flextronics International pleaded guilty on Tuesday, telling a U.S. judge he was paid $200 an hour by an expert network firm to spill inside information to hedge funds,” Basil Katz reports for Reuters.

“Walter Shimoon, 39, was the latest out of more than a dozen accused in a broad insider trading probe to plead guilty in Manhattan federal court to working illegally while consulting for Primary Global Research,” Katz reports. “At the plea hearing on Tuesday, Shimoon told U.S. District Judge Jed Rakoff that he was paid $200 an hour by PGR to give secrets about Flextronics or its customers to hedge funds and investors, often over the phone.”

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Katz reports, “Shimoon, arrested in December, was accused of leaking secrets about Apple Inc. iPad ahead of its launch and giving up new details about the company’s iPhone 4. Following an agreement with prosecutors, Shimoon pleaded guilty to two counts of conspiracy to commit securities fraud and wire fraud and one count of securities fraud. He faces up to 30 years in prison at his July 8, 2013 sentencing.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

9 Comments

  1. If $200 an hour was compelling enough to risk career, reputation, and custody, what was he making as a “senior director” at Flextronics International?
    $8 an hour?
    This doesn’t add up.
    I suspect a girl was involved.

  2. Meanwhile, nobody at New York-based hedge fund
    Kingdom Ridge Capital, for which Shimoon worked, was paid by and to which he supplied the information, has not been charged with anything. Nada.

    Have hedge funds become too powerful? Are they immune from investigation? In the past decade, hedge funds have grown immensely, with the power to sway, if not manipulate markets. Increasingly, the fate of individually traded companies is not voted on by investors on Wall Street based on their earnings growth and cash/debt, but by the whims of options traders in Chicago and hedge funds.

    Apple is a perfect example. Its P/E ratio is patently ridiculous given the company’s earnings growth, history of blowing through quarterly earnings estimates, innovation, lack of debt and growth of cash and marketable securities. Not that I’m complaining – it presents a buying opportunity. But artificial forces are holding back the true valuation of Apple stock. And I suggest that you look no further than the actions of large hedge funds and options traders in Chicago.

    In many cases, very suspicious news leaks and rumors have impacted the price of Apple stock, and it’s not hard to suspect that forces acting at the behest of hedge funds are often at work. Yet, no SEC investigations ever seem to be brought forth on whether this is happening.

    I for one smell a rat. Hedge funds have become so arrogant that to them, the individual investor is mere cannon fodder. It’s time this changed.

      1. Generally Shimoon would plead guilty in return for his testimony against the bigger player. What’s surprising me is that his sentencing is before his testimony and the as yet hypothetical second trial.

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