Four charged with leaking confidential information about Apple products to hedge funds

Mon, Dec 27, 2010

Legal, News

When it comes to product secrecy, no other company can hold a candle to Apple – which is why the company takes efforts to leak confidential product information so seriously. The insurmountable problem faced by Apple, however, is that there’s only so much information it can keep close to the vest. Manufacturing processes take place overseas and orders to component suppliers inevitably clue people in as to Apple’s plans. And while NDA’s and the fear of losing one’s job may effectively prevent most people from spilling the beans about Apple’s future product plans, others simply can’t resist the temptation of extra money.

Last week, the FBI charged James Fleishman, Mark Anthony Longoria, Walter Shimoon and Manosha Karunatillaaka with conspiracy to provide confidential information, conspiracy to commit wire fraud and wire fraud. The root of their arrests? Divulging confidential information about upcoming tech developments, including secretive Apple products, to hedge funds.

Shimoon, for example, was an employee at Flextronics, a company which provides components such as cameras for the Apple iPhone. The FBI alleges that he supplied hedge fund managers with information pertaining to the then unreleased and unannounced iPhone 4 and iPad. Specifically, Shimoon divulged that the iPhone 4 would come with a 5 megapixel camera in the rear and a front facing VGA camera in the front. With respect to the iPad, Shimoon wasn’t directly involved in the project but knew enough to know that it didn’t have a camera.

In return for the inside scoop, Shimoon was paid $22,000 by a hedge fund manager in exchange for his “consultation services.”

And then there’s James Fleishman whose activities extend far beyond Apple. As a sales manager for a research firm called Primary Global Research, Fleishman served as a middleman for money managers and employees at a number of tech companies such as Dell and AMD.

The complaint says the employees from those companies would act as “consultants,” and provide inside information such as advance sales figures or upcoming devices to the hedge fund managers, which were clients of Fleishman’s firm. Primary Global Research would then pay the consultants for their inside information. The complaint says at times Fleishman would act as a go-between, and other times hedge fund clients would contact the “consultants” directly. Often, he arranged meetings between the clients and the consultants.

Returning back to Shimoon, he was granted $120,000 bail last week and is scheduled to appear in federal court in New York where the complaint was initially filed. Note, though, that Shimoon got off easy as federa prosecutors were hoping to set bail at $1 million. Fleishman, meanwhile, was released on $700,000 bail.

Shimoon has yet to respond to the charges levied against him. Once the case gets rolling, it’ll be interesting to learn the specific details behind Shimoon’s role as a leaker of “for your ears only” Apple information.

via International Business Times



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