Feds arrest Portland exec for securities fraud

Feds arrest Portland exec for securities fraud

Feds arrest Portland exec for securities fraud

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by Associated Press

kgw.com

Posted on February 17, 2012 at 10:00 AM

Updated Friday, Feb 17 at 12:00 PM

NEW YORK (AP) -- The president of an Oregon investment research firm has been arrested on conspiracy and securities fraud charges in a continuing crackdown by federal authorities on networking firms accused of passing along secrets about public companies as if it were legitimate research.

John Kinnucan of Portland, Ore., was awaiting an initial court appearance Friday in Oregon. The president of Broadband Research LLC was arrested late Thursday at his residence.

He is accused of obtaining secrets about publicly traded companies and selling the information to Broadband's clients, including hedge funds and money managers.

U.S. Attorney Preet Bharara said Kinnucan used financial incentives, fancy meals and other inducements to get public company insiders to reveal secrets.

"He allegedly made a business model out of passing off those secrets to his hedge fund clients as legitimate research," Bharara said.

Kinnucan told Bloomberg News last July that he expected to be arrested after refusing to wear a wire to secretly record a money manager.

In October, 2010, he sent an email to about 50 recipients saying that the FBI asked him to record conversations, Bloomberg reported.

He told Bloomberg he never received nor distrubuted insider tips. Any information he provided was publicly available.

FBI Assistant Director-in-Charge Janice K. Fedarcyk criticized Kinnucan, saying: "That kind of information beats research every time. The only problem is it isn't legal."

Kinnucan is accused of obtaining inside information about earnings reports from companies such as F5 Networks Inc., Sandisk Corp. and Flextronics International Limited between 2008 and 2010 and relaying the numbers to his clients.

It was not immediately clear who will represent Kinnucan in court. The Securities and Exchange Commission brought civil charges against Kinnucan as well.

Kinnucan told Bloomberg News last July that he expected to be arrested after refusing to wear a wire to secretly record a money manager.

In October, 2010, he sent an email to about 50 recipients saying that the FBI asked him to record conversations, Bloomberg reported.

He told Bloomberg he never received nor distrubuted insider tips. Any information he provided was publicly available.

 

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