The Wall Street Journal reports that five arrests were made in the last few hours of different insiders including Walter Shimoon, director of Flextronics, one of Apple’s suppliers, on charges of leaking confidential details about the iPhone and iPad prior to their launch.
Shimoon is accused of providing “highly confidential” sales forecasts and details about the iPhone prior to its launch during his time as a consultant for Primary Global, in addition to leaking information about the K48 project, the tablet that would eventually become the iPad.
Specifically, in one of the transcripts of the wiretaps that have been passed on to the press, Shimoon said, referring to the iPad, “It’s a whole new category. I think it’s called K48… at Apple you can get fired just for saying K48… outside of a meeting where the people involved in the project don’t participate. They’re crazy about it.”
These arrests are the result of three years of investigation by the Securities and Exchange Commission, which has put several hedge and investment funds under scrutiny in recent weeks. According to the newspaper, further arrests are expected in the coming months.
This type of firms, offer in exchange for a fee a series of sessions where investors can meet with employees of different companies for the purpose of conducting “market research”, but according to FBI Director Janice Fedarcyk, “the information offered by the four consultants went far beyond what is admissible in this type of practice” , reaching more than $400,000 for it.
US Attorney Preet Bharara has described the case as a “corruption network formed by people within some of the world’s leading technology companies who stole and sold their most valuable insider information “ . James Fleishman, vice president of Primary Global and another of the defendants arrested yesterday, told an executive cooperating with the government that he could get anything he was looking for. “Whether it’s long or short term, we’re going to get you the people you need”
Other consultants accused in the case include employees of Dell, AMD and Taiwan Semiconductor Manufacturing Co. All of whom will face charges of wire fraud and conspiracy to commit stock market fraud.