First Arrest in SEC Insider Trading Probe: Don Chu of Primary Global Research
According to a statement from the Justice Department, Chu was charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud in connection with securities for arranging for information about public companies to be passed to hedge funds. Chu could spend a maximum of 30 years in prison and be fined twice the gross gain or loss from the offense.
The statement said that Chu was "conspiring to promote his firm's consultation services by arranging for insiders at publicly-traded companies to provide material, nonpublic information to the firm's hedge fund clients for the purpose of executing profitable securities transactions."
Chu was nabbed in advance of a scheduled flight to Taiwan on Nov. 28.
The arrest follows FBI raids on the offices of hedge funds Level Global Investors in New York, Loch Capital Management in Boston, and Diamondback Capital Management in Stamford, Conn., on Monday. Some on Wall Street say the SEC's targeting of analysts may be a bit too aggressive.