First Arrest in SEC Insider Trading Probe: Don Chu of Primary Global Research

First Arrest in SEC Insider Trading Probe The Federal Bureau of Investigation arrested Don Chu, an expert on Asian markets for Primary Global Research, on Wednesday, setting the tone for the Security and Exchange Commission's crackdown on insider trading.

According to a statement from the Justice Department, Chu was charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud in connection with securities for arranging for information about public companies to be passed to hedge funds. Chu could spend a maximum of 30 years in prison and be fined twice the gross gain or loss from the offense.

The statement said that Chu was "conspiring to promote his firm's consultation services by arranging for insiders at publicly-traded companies to provide material, nonpublic information to the firm's hedge fund clients for the purpose of executing profitable securities transactions."

The complaint alleges that Chu arranged the delivery of information on the quarterly earnings of a publicly-traded technology company to one of PGR's hedge fund clients. An employee of the tech company revealed its revenue numbers, average sales prices, unit sales for different product lines, gross margin figures, and revenue forecasts to the hedge fund prior to the tech company's publicly announcing its quarterly report. The names of the hedge fund that received the information and the company supplying it were not revealed.

Chu was nabbed in advance of a scheduled flight to Taiwan on Nov. 28.

The arrest follows FBI raids on the offices of hedge funds Level Global Investors in New York, Loch Capital Management in Boston, and Diamondback Capital Management in Stamford, Conn., on Monday. Some on Wall Street say the SEC's targeting of analysts may be a bit too aggressive.

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bolten2

Chu got his information from company insiders who probably received a hefty payoff. Are they being arrested too?

November 25 2010 at 10:32 AM Report abuse +1 rate up rate down Reply
Larry Lee

SAC Capital is connected to all of the CEO's of the major banks and many from the Bush administration. They should be the next to be indicted. Go get'em Barrack!!!!

November 25 2010 at 9:27 AM Report abuse +3 rate up rate down Reply
crimson00king

These are the types of people the Republicans are crying about needing Tax Breaks. The Wallstreet banker thieves. The drug addicted Hollywood Brats. Please people contact either call or e-mail your congressmen your senators and the White House and tell them NO MORE TAX BREAKS FOR THE RICH. We would have to borrow another 700 billion from the Chinese to pay for these breaks. This is putting our country at a great security risk we alrealdy owe them too much. Please people think and act.

November 24 2010 at 11:05 PM Report abuse +2 rate up rate down Reply
dterraman

say it ain`t so....

November 24 2010 at 6:10 PM Report abuse +1 rate up rate down Reply
jlarge5396

A way of life in so many different cultures, some worse then others. There is a company base in Wash. DC owned by many past and present world political figures. You won't see this on CNN a 47 min investigation on this company. http://www.informationclearinghouse.info/article3995.htm

November 24 2010 at 6:06 PM Report abuse +1 rate up rate down Reply
ksmwtm

Martha Sewart set the bar so this dude should get a gazillion years. Look out Paulson & buds. Or is Mr. Chu the scape-goat & thats thats?

November 24 2010 at 5:52 PM Report abuse +2 rate up rate down Reply
fred

Do they have time to after Rankin now? This is America! There can't be two sets of rules for income tax evasion, is there??? We have two sets of rules for some?

November 24 2010 at 5:08 PM Report abuse +1 rate up rate down Reply
reeltime07

Now the real fear starts. Will he turn states evidence? Will he survive if he does so? Stay tuned for next weeks installment of " As The Greedy Live" brought to you by the good folks at the Bernie Madoff school of ethics.

November 24 2010 at 4:51 PM Report abuse +5 rate up rate down Reply
1 reply to reeltime07's comment
dterraman

bernie got nothing on federal government with their scams..

November 24 2010 at 6:11 PM Report abuse +2 rate up rate down Reply
jyban

OH BOY!!! Are we to feel thankful that "Big Brother" is bring down the bad guys? Horse poop! Why not go after Wall Street, ING, Goldman Sucks, Fells Bargo and all those other scum that have us (the little guy)begging for scraps. You people suck!

November 24 2010 at 4:21 PM Report abuse +4 rate up rate down Reply
abbnormalru

Everybody sing Greed makes the world go round Greed makes the world go round Come on wall street sing. Hummmmmmmmm Now if they had done this 10 yrs ago. Wait this is America. We do nothing til it's a crisis Relax we still have oil to burn. Let China lead the way on solar,wind.

November 24 2010 at 4:11 PM Report abuse +2 rate up rate down Reply