Walter Shimoon, a former executive with Flextronics, plead guilty Tuesday of selling secrets about unreleased Apple products to hedge funds. At the time, Flextronics supplied parts to Apple, and Mr. Shimoon was a senior business director who would meet with hedge fund traders for US$200 an hour to tell them about Apple’s plans for the iPhone 4 and the product that was eventually released as the iPad.
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Mr. Shimoon was arrested in December of 2010 as part of a U.S. Securities and Exchange Commission investigation in insider trading, and charged in February of 2011 with feeding insider information to traders. He is the 12th person to plead guilty as part of the investigation, but Reuters reported that none of the people that allegedly paid Mr. Shimoon for his illegal information have yet been charged.
One of those firms, Kingdom Ridge Capital, is a hedge fund with $350 million under management. According to court documents that were unsealed on Tuesday, the firm made $560,000 in profits during October of 2009 alone trading on information about Flextronics clients like Apple, information provided by Mr. Shimoon.
At the heart of the investigation are so-called “Expert Networks,” groups of people assembled by third party companies to meet with and speak to hedge fund traders. These “experts” are people like Mr. Shimoon with insider knowledge about products that often being assembled in Asia for companies like Apple.
In addition to his work with KRC, Mr. Shimoon also admitted to accepting $27,500 from Broadband Research for providing information, though the firms owner, John Kinnucan, has denied doing anything wrong through an attorney.