Man pleads guilty to securities fraud

Michael P. Tremoglie Jun. 29, 2012, 7:00am

NEW YORK (Legal Newsline) - The president of investment research firm and a paid consultant of an expert networking firm pled guilty Tuesday to one count of conspiracy to commit securities fraud and wire fraud in connection with an alleged insider trading scheme.

Pleading guilty was Tai Nguyen, 49, of Oregon City, Ore. He provided material, nonpublic information to members of the investment community, the Department of Justice said. Specifically, the information was the quarterly financial results for Abaxis Inc.

Manhattan U.S. Attorney Preet Bharara said: "Tai Nguyen was a consultant who, for a handsome fee, provided his clients with confidential and proprietary inside information in violation of the law. He also illegally traded on that information himself, earning a quick and easy profit, and exploiting the information for all it was worth.

"Today's plea adds another to our nationwide roll call of those who choose to corrupt our markets. We will continue to go after individuals who flout the securities laws and see to it that they are prosecuted and punished.

According to documents, the defendant acquired financial information from Abraxis from 2006 through mid-2009. The company's anticipated revenues, earnings, gross margins, and other financial results were obtained and acquired prior to the company's quarterly announcement.

After obtaining the Abaxis Inside Information, he allegedly provided it, on multiple occasions, to Noah Freeman, a research analyst at a hedge fund based in Boston, and to Samir Barai, a portfolio manager at two separate hedge funds in New York.

Because of this insider information, Freeman's hedge fund earned more than $4.5 million between July 2006 and May 2009, while Barai's hedge fund earned over $1.7 million between July 2008 and September 2009, the DOJ claims.

Freeman's and Barai's hedge funds paid Insight Research and/or Nguyen consulting fees of several thousand dollars per month, the SEC said. At various times, Insight Research earned consulting fees of more than $15,000 a month from just one of these hedge fund clients, the DOJ said.

According to DOJ, in addition to passing the Abaxis Inside Information, on numerous occasions between 2006 and 2009, Nguyen used the information to trade Abaxis stock in his personal brokerage account. He earned over $147,000 during that time period.

The crimes carry a maximum sentence of five years in prison and a maximum fine of the greatest of$250,000, twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss to persons other than the defendant resulting from the offense. As part of his plea agreement, Nguyen agreed to forfeit the proceeds of the offense.

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