New York Investment Firm Employee Pleads Guilty to Insider Trading Scheme

(Source: FBI) – NEW YORK—Hyung Lim, a former technology company employee, pleaded guilty today in Manhattan federal court to conspiracy to commit securities fraud based on his involvement in an insider trading scheme, announced Preet Bharara, the U.S. Attorney for the Southern District of New York, and Mary Galligan, the Acting Assistant Director in Charge of the New York Field Office of the FBI. As part of the scheme, Lim obtained inside information from an employee of NVIDIA Corporation, a publicly traded company, and passed that information to an analyst at a wealth management company who then traded in NVIDIA stock. Lim also pleaded guilty to wire fraud for passing inside information that he obtained while working at Alterra Corporation, another publicly traded company. He pleaded guilty before U.S. District Judge Richard J. Sullivan.

According to the information to which Lim pleaded guilty, statements made during the plea proceeding, and other court documents:

Between 2008 and 2011, Lim obtained inside information from an NVIDIA employee who worked in the company’s finance department. The inside information included earnings information, quarterly revenues and gross margins that had not yet been publicly announced. Lim passed the inside information to Danny Kuo, a research analyst at a wealth management firm headquartered in California. Kuo then provided the information to a portfolio manager at his firm, who executed trades in NVIDIA stock. In exchange for the information, Lim received cash payments and other items of value from Kuo.

Between 2005 and 2008, while working in the marketing department of Alterra, Lim also passed inside information about Alterra to Kuo. At that time, Kuo worked as a research analyst at an investment firm in New York.

Lim, 45, of Los Altos, California, pleaded guilty to one count of conspiracy to commit securities fraud and one count of wire fraud. The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million. As part of his plea agreement, Lim agreed to forfeit the amount of proceeds obtained as a result of the offenses. He is scheduled to be sentenced by Judge Sullivan on March 4, 2013.

Kuo previously pleaded guilty on April 13, 2012, to conspiracy and securities fraud charges and awaits sentencing.

Mr. Bharara praised the investigative work of the FBI. He also thanked the U.S. Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Antonia M. Apps, Richard C. Tarlowe and John T. Zach are in charge of the prosecution.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.