US government insider trading investigation widen as ex-analyst admits fraud

US Government

US Government

As the US government’s insider trading investigation widens, a former analyst with a Wall Street based consulting firm focused on the semi-conductor business has pleaded guilty to securities fraud.

The analyst – Karl Motey, who now runs the Coda Group, a California based consulting firm, has turned approver for the government and will testify against  a former employee of Primary Global Research – a California based expert network firm and three employees of listed technology companies.

According to court documents unsealed on Thursday, Mr. Motey pleaded guilty to securities fraud and conspiracy in a federal court in New York on December 14.

He agreed to cooperate in the investigation after admitting to passing on of sensitive information of Marvell Technology Group and United Microelectronics to different hedge funds.

The government managed to enter into another plea bargain last week when a former global supply chain manager of Dell Computers Daniel Devore, admitted to fraud and conspiracy and pleaded guilty of tipping clients of Primary Global – Guidepoint Global and Vista, a company Guidepoint bought. Court papers indicate that Motey received non-public information from an employee of Marvell Technology and other sources from Marvell about the company’s customers, between 2007 and March 2009.

Motey was paid by hedge funds – who were clients of his consulting firm, through New York brokerages for passing on information. Motey worked with Wachovia securities as a senior Semiconductor Analyst for several years and is listed as an agent of Coda, California State records indicate.

Motey may also share information with the government about receiving tip offs from a source at Taiwan’s United Microelectronics and an unnamed California based hedge fund, court documents indicate.

Motey’s lawyer refused to comment and he didn’t return calls. A spokesman for Marvell said they were cooperating with the government in the ongoing probe refusing to comment further. United Microelectronics was unavailable for comments.

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