The Complaint alleges that the hedge funds paid to Jiau over $200,000 — and that such payments were made through an expert networking firm that purported to provide “institutional money managers and analysts with market intelligence” through a “Global Advisory Team of Experts.” According to press reports, it appears that Jiau may have served as a consultant to Primary Global Research LLC. during the relevant times. For additional background on Primary, see:
- Happy Holidays: New Wave of Insider Trading Arrests (December 16, 2010 “Street Sweeper”)
- In Depth Analysis of SEC Insider Trading Case (December 9, 2010 “Street Sweeper”)
- SEC Names Law Firm Employee In Insider-Trading Case(December 9, 2010 “Street Sweeper”)
- How Don Chu Was Caught (November 24, 2010 “Street Sweeper”)
The information that Jiau purportedly provided about Marvell was allegedly on point and accurate, and preceded Marvell’s public announcement of its quarterly financial results. In her conversations (several of which were recorded by one of the hedge fund managers), Jiau made it clear that she had received Inside Information from an employee at Marvell.
On May 23 and May 28, 2008, it is alleged that Jiau had telephone conversations with two portfolio managers at separate hedge funds, during which she advised them of Marvell’s quarterly revenues, gross margins and earnings pershare (“EPS”) for the quarter ending on May 3, 2008.
In August 2008, Jiau allegedly provided the same hedge fund managers with Marvell’s quarterly revenues, gross margins and EPS for the quarter ending on August 2, 2008.
As a result of trading on Jiau’s Inside Information concerning Marvell’s earnings for the quarter ending May 3, 2008, one of the hedge funds netted profits of over $820,000.
On December 28, 2010, Jiau, 43, of Fremont, CA was arrested at her Fremont residence and was presented in federal court in the Northern District of California on December 29, 2010, on charges of
- Conspiracy to Commit Securities Fraud (Count One) which carries a maximum potential penalty of 5 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense; and
- Securities Fraud (Count Two) which carries a maximum potential penalty of 20 years inprison and a maximum fine of $5 million.
NOTE: The charges contained in the Complaint are merely accusations, and Defendant Jiau is presumed innocent unless and until proven guilty.