Federal agents arrested Wednesday an executive at a California “expert network” firm in connection with a sweeping three-year investigation of insider trading on Wall Street.
The executive, Don Ching Trang Chu, of Somerset, N.J., was arrested before a trip to Taiwan he had scheduled for Sunday, prosecutors said.
Chu has been charged with one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud and fraud in connection with securities. The first count carries a maximum sentence of five years and the second up to 25 years. Both carry a potential fine of $250,000, prosecutors said.
Chu was listed earlier this week as an Asia expert on the website of Primary Global Research LLC. The Mountainview, Calif.-based firm, which was not identified by prosecutors in their complaint against Chu filed Wednesday, pairs hedge funds and other investment companies with current and former employees at publicly traded corporations to provide insight into their companies and industries.
Primary Global Research did not immediately comment. A lawyer for Chu did not immediately respond to a request for comment.
The Wall Street Journal previously identified the firm as one of a number of expert network firms whose consultants are under investigation by federal prosecutors. The Journal reported Tuesday that the Federal Bureau of Investigation recently questioned a different manager at Primary Global.
According to prosecutors, Chu arranged for the firm’s consultants to provide inside information about earnings releases for publicly traded companies.
Federal authorities are intensifying the insider-trading investigation and have been ramping up their questioning of big hedge-fund and mutual-fund firms and Wall Street executives, demanding records for trading and communications with investment consultants and each other. Since Monday, the FBI has raided several hedge funds and prosecutors have subpoenaed large hedge funds and mutual funds for documents.
Some of Wall Street’s most influential investment firms have been subpoenaed in the probe, including mutual-fund company Janus Capital Group and institutional-investment firm Wellington Management Co., as well as hedge-fund firms Citadel LLC and SAC Capital Advisors, according to people familiar with the matter. The firms either said they were cooperating or declined to comment.
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