John Kinnucan, founder of Broadband Research, is making headlines again, and this is not bullish for independent research providers. Kinnucan was recently cited as having received inside information during the guilty plea of Primary Global expert Walter Shimoon — a charge Kinnucan denies. More bizarrely, Kinnucan recently sent a blast email addressed to Maverick Capital founder Lee Ainslie asserting that the $11 billion fund may “soon be charged with insider trading.”
In the fall, press headlines wondered whether John Kinnucan was a hero or a schmuck for his grandstand defiance of the FBI. For independent research providers, he is becoming a nightmare as his erratic behavior gives independent boutiques a bad name.
The latest episode started last week when Walter Shimoon, former senior director of business development at Flextronics International, pleaded guilty to inside information charges. During his trial Shimoon testified he was paid $27,500 by Broadband Research. The government asserted in its court filings that Shimoon committed securities fraud “in connection with Shimoon providing material, nonpublic information to John Kinnucan, Broadband Research, and, indirectly, to Broadband Research’s clients, including money managers.”
Kinnucan disputed Shimoon’s court statements, saying he never covered Flextronics. He claims that he collects publicly available information. In fairness, there seems to be confusion in the press about the nature of Kinnucan’s research. Most reports label his firm an expert network, while we suspect he would be more correctly labeled a channel checker. Broadband Research is defunct as far as we can tell and Kinnucan is reportedly now managing money for a few friends and relatives.
His antics with Maverick Capital are harder to understand. Shortly after Shimoon’s guilty plea, Kinnucan reportedly sent a blast email addressed to Lee Ainslie with the subject line “Yo Lee homey, Sorry to break it to you, but looks to me likely that Maverick will soon be charged with insiderr trading. Just thought I’d let you know…”
According to Reuters, Kinnucan believes Maverick owes him $15,000 for research information he provided on technology companies in the second-half of 2010, and he sent the email in anger over the unpaid bill. The email was copied to the same group of hedge fund and mutual fund traders and analysts that received the original email alerting them to the FBI’s interest. This is not a receivables collection strategy we would recommend.