Another Independent Charged With Insider Trading


Tai Nguyen, a former sell-side technology analyst who ran his own independent equity research firm, Insight Research, pleaded guilty to insider trading based on charges brought by federal prosecutors and the U.S. Securities and Exchange Commission.

The SEC complaint alleges that from 2006 through 2009, Nguyen traded Abaxis, Inc. based on inside information he received from his brother, who worked in the finance department at Abaxis.   Nguyen’s brother worked for the CFO of Abaxis and leaked revenues, margins and earnings per share information prior to public release.  Nguyen is alleged to have made approximately $145,000 in illicit profits. Nguyen also passed that same information to Barai Capital Management and Sonar Capital Management, two hedge fund clients of Insight Research.  The SEC  complaint alleges that the hedge funds gained over $7.2 million in illicit profits and avoided losses.

Nguyen was the founder and owner of Insight Research LLC, a independent research provider specializing in the technology sector.  (Insight Research Corporation is a separate research boutique based in New Jersey covering the telecom industry.)  Based on regulatory filings we reviewed, Nguyen was a semiconductor analyst at Susquehanna Financial from 2003 to 2005, and prior to that worked at Friedman, Billings Ramsey and Robertson Stephens.

Nguyen was allegedly receiving $15,000 per month from one of the hedge fund clients.  It appears that he was featured as an expert by the expert network Primary Global Research (PGR).  Samir Barai of Barai Capital and Noah Freeman, who was portfolio manager at Sonar Capital at the time, were clients of PGR.  It appears that Barai and Freeman first contacted Nguyen through PGR, although it is unclear whether PGR was used for subsequent contacts.

Under a plea agreement with the government, Nguyen faces between 46 months to 57 months in prison. He also agreed to forfeit $3.9 million. Sentencing is set for Nov. 8.

Since 2009, 64 of 70 people charged have pleaded guilty or been convicted of criminal charges in the insider trading probe.  Of these, 25 cases have involved independent research firms.  17 cases involve people affiliated with Primary Global Research, 3 with Broadband Research LLC, a technology boutique, 2 with Coda Group and 3 others with connections to expert networks.


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