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Former Samsung manager testifies to leaking iPad info to hedge fund

post #1 of 39
Thread Starter 
Witness testimony from a former Samsung manager during an insider trading trial has revealed that he leaked early information on the iPad to representatives from an "expert network" firm and a hedge fund.

Suk-Joo Hwang, a 14-year veteran of Samsung, testified in a federal court on Wednesday after being granted immunity from prosecution, Bloomberg BusinessWeek reports. He admitted to having lunch in Mountain View, Calif., with Primary Global Research executive James Fleishman and a hedge fund manager and providing confidential information about Samsung's shipment of LCD screens to Apple for the iPad.

Samsung served as one of the suppliers for the original iPad. Apple is expected to be the South Korean electronics giant's largest customer this year with an estimated $7.8 billion in orders.

"One particular thing I remember vividly was that I talked about the shipment numbers of Apple, it was about iPad, he said. This is in December 2009, before it came out with the tablet PC, they didnt know the name then, so I talked to them about the tablet shipment estimates in that meeting.

Fleishman faces 25 years in prison if convicted of the two counts of conspiracy he has been charged with. He was arrested last December as part of a wide-ranging Securities Exchange Commission probe investigating the practice of expert networks, which charge a fee to connect investors with employees of companies.

When asked how Fleishman and the fund manager reacted to the information he provided, Hwang said, They didnt know about it, adding that the fund manager was very excited.

In fact, I said, Please, just keep this to yourself, Hwang testified while reenacting the scene. I remember after I said this, James, he was nodding his head.

Hwang said he quickly became concerned that they had been overheard by an Apple employee. "After I said it, I looked around, he remarked. The first thing I thought was Wow, I said it too loud and then I really freaked out.

The witness acknowledged that he had earned roughly $38,000 for his work as a consultant. He said he grew especially worried that he would be discovered as a leak after learning that Samsung had lost a supply contract with Apple.

I thought, Oh that guy was an Apple guy and they found out, Hwang said. I was scared.

After serving as an expert-network consultant for six years, he was contacted by the Federal Bureau of Investigation last October in connection with the insider trading probe. According to a court order from U.S. District Judge Jed Rakoff, Hwang's testimony can't be used against him and he can only be prosecuted if he commits perjury. Hwang was fired by Samsung in June.

One U.S. Attorney has described the charged individuals as "a corrupt network of insiders at some of the world's leading technology companies " who "sold out their employers by stealing and then peddling their valuable inside information."

After Fleishman and several consultants were arrested, FBI Assistant Director-in-Charge Janice Fedarcyk went on record as saying, "The information trafficked by the four 'consultants' went way beyond permissible market research." For instance, Fleishman allegedly told an executive cooperating with authorities: "Whatever you're looking for, whether it is short term or long term, we'll have people."

A former employee of an Apple supplier was arrested in connection with the probe. Walter Shimoon, who served as senior director of business development at Flextronics, is accused of providing "highly confidential" sales forecasts for an unreleased iPhone, as well as leaking information about the iPad. Unlike Fleishman, who has pleaded not guilty, Shimoon has pleaded guilty to charges of conspiracy to commit wire fraud and security fraud.
post #2 of 39
Pretty juicy story.

In the full article from Bloomberg, the US Assistant Attorney is named Antonia Apps. Maybe the government does have a sense of humor.
post #3 of 39
These stories get better and better every day.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #4 of 39
Quote:
Originally Posted by AppleInsider View Post

Suk-Joo Hwang

please,stop ityou're killin' me
post #5 of 39
Quote:
Originally Posted by solipsism View Post

These stories get better and better every day.

Apple is big business. Trading in Apple secrets is big business too. This is probably just the tip of the iceberg.
post #6 of 39
Another example proves that just because there are nearly 2 billion Chinese out there doesn't mean you should ignore Korean invasion.
post #7 of 39
Only $38,000?

Was that low sum worth it for somebody to lose their job over and become involved in illegal insider trading?

Apple is a multi billion dollar business, if I was working for Samsung and if I decided to become a dirty rat, then I would definitely try and get a much bigger payday out of such highly valuable and illegal information. This Suk-Joo Hwang dude sounds like a real moron.
post #8 of 39
but he told them to "keep it to themselves" so its not HIS fault they went and used the info improperly is it?
post #9 of 39
Is this Samsung mobile? Because it sounds like it's not.

Either way if you're going to betray/backstab/underhand/etc Apple...at least make over a million for the risk...that's like selling Cocaine for 1 dollar profit a gram.
post #10 of 39
Quote:
Originally Posted by AbsoluteDesignz View Post

Is this Samsung mobile? Because it sounds like it's not.

Either way if you're going to betray/backstab/underhand/etc Apple...at least make over a million for the risk...that's like selling Cocaine for 1 dollar profit a gram.

What's a good margin ummm, for comparison purposes. . .
post #11 of 39
Hello Samsung, your coffin is ready! Please step inside and we will begin hammering in the nails.

... at night.

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... at night.

Reply
post #12 of 39
Folks, lets face it :
This is how it is done. Why big money stays big. Corporations may be "people", but they are "people "with no morals. There is no money in it.
post #13 of 39
Quote:
Originally Posted by ChristophB View Post

What's a good margin ummm, for comparison purposes. . .

well I mean...when I was younger it was cheap and since I've aged I've fallen out of those circles who would know for sure but I've heard it's much more expensive now...but in the Northeast US (mainly NY upstate and Northeast NJ) a gram would go for 50-60 bucks. Depending on your connection you could get a kilo for about 25k-35k (40k if you had a middle middle man) so you're looking at up to 100% profit at the street level per gram sold. In other words...risk is worth reward (subjective, I know...it wasn't worth it for me due to moral implications and increased police presence).

I know it use to go for over 100 a gram in Maryland...and I believe it was less than 50 in the NYC metro area.

But yea...$38,000 for Apple secrets (plural)? The definitive trendsetters in tech? he must've been severely desperate, stupid, or a bad negotiator. Only way that would make sense is if he only sold up to about 3 secrets. Otherwise get a second job. lol
post #14 of 39
Curse those freaking hedge funds. I hope all the people running them get chucked in the slammer. There ought to be some limit to how many shares of a company end up in the hands of institutions. There should be some ruling that is able to limit all hedge and institutional funds to about a total 50% so they can't as easily control a company's share price. They call them "expert networks" but they are really "criminal networks".
post #15 of 39
Here is how these networks work, and they been around for a long time, these so called "market research" groups will contact people and ask them to be subject matter expert in their area of knowledge and answer questions. They will tell you, they are not looking for you "to share information that you are not allow to share." Many times most of the questions are very benign and are generally industry information like who does or could use a particular technology, who are the major player both from a supply side and OEM side and maybe who would be the final customer.

These company will pay you anywhere from a few hundred $ for your time to a few thousand depending on your background and how many people they have you meet with. There is nothing illegal about this as long as your not share information which is not public or it is specific to what you do for a company.

The less up front part of this, and what many of these companies hope happens is you share so sort of information which is not public knowledge or is very specific as this guy did. Usually the person sharing the information did not do it on purpose, it just comes out in the question and answer. However, what happen over time is these SME like that fact that people are interested in what they have to say and they just begin sharing more and more as they get more an more attention and money.

Most of these Market Research company providing access to the expert networks are the ones who taking advantage of people, they befriend these people and wine and dine them and hope they share information they can use as in this case.
post #16 of 39
Quote:
Originally Posted by quinney View Post

please,stop ityou're killin' me

Why is it funny?
post #17 of 39
This is not surprising. In fact, it's likely commonplace. What is surprising is that, with all the inside dope they pay for, the analysts still consistently misfire on their predictions. Can they be indicted for being wrong all the time?
post #18 of 39
Quote:
Originally Posted by stelligent View Post

Why is it funny?

He's dyslexic. He has switched the phonemes in 'Joo' and 'Hwang' and then pronounced it.

Also, he's childish. \

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #19 of 39
Quote:
Originally Posted by stelligent View Post

This is not surprising. In fact, it's likely commonplace. What is surprising is that, with all the inside dope they pay for, the analysts still consistently misfire on their predictions. Can they be indicted for being wrong all the time?

The easiest way to be an analyst is to apply past results to future performance. This does not account for innovation, which is where Apple shines.

The same thing happens all the time in tech, where innovation matters. Look at how few analysts thought the Wii would be anything but Nintendo's last gasp.
post #20 of 39
Quote:
Originally Posted by stelligent View Post

This is not surprising. In fact, it's likely commonplace. What is surprising is that, with all the inside dope they pay for, the analysts still consistently misfire on their predictions. Can they be indicted for being wrong all the time?

Yes, it happens - even though it's illegal. Furthermore, it probably puts Samsung in violation of the NDA they signed with Apple.

The other factor here - if Samsung's panel division is sharing information with hedge funds, does anyone doubt that the other Samsung divisions (read: tablet division) were also getting inside information about Apple products? That is a huge no-no and could cost Samsung a fortune - either in lawsuits or in Apple pulling even more business away from Samsung. Why should Apple trust a company which has been proven to be untrustworthy?

Heck, just today there was a news story about a different South Korean company which pulled a stunt on trade secrets - and cost them nearly a billion dollars:
http://www.processingmagazine.com/news/9/2011/2427/DuPont-awarded-$920-million-in-trade-secrets-lawsuit
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #21 of 39
Quote:
Originally Posted by Tallest Skil View Post

He's dyslexic. He has switched the phonemes in 'Joo' and 'Hwang' and then pronounced it.

Also, he's childish. \

I am not dyslexic
post #22 of 39
Quote:
Originally Posted by quinney View Post

I am not dyslexic

Perhaps not, but there's clearly an element of irony in your sophomoric comment that escapes you. I would explain it to you, but is that the bell I hear? Recess is over. Time to return to your JK class.
post #23 of 39
Quote:
Originally Posted by jragosta View Post

Yes, it happens - even though it's illegal. Furthermore, it probably puts Samsung in violation of the NDA they signed with Apple.

The other factor here - if Samsung's panel division is sharing information with hedge funds, does anyone doubt that the other Samsung divisions (read: tablet division) were also getting inside information about Apple products? That is a huge no-no and could cost Samsung a fortune - either in lawsuits or in Apple pulling even more business away from Samsung. Why should Apple trust a company which has been proven to be untrustworthy?

Heck, just today there was a news story about a different South Korean company which pulled a stunt on trade secrets - and cost them nearly a billion dollars:
http://www.processingmagazine.com/news/9/2011/2427/DuPont-awarded-$920-million-in-trade-secrets-lawsuit

Well, this is the sweet irony of the mobile space. No one can be truly independent. If you're not purchasing someone else's component, you are probably licensing their IP. All signs suggest that Samsung is making more profits making displays and flash memory for Apple than they are making tablets. Yet they keep churning out tablets - 7", 8.5", 10" ...

So, if Apple completely cuts off Samsung as a supplier, will that solve the problem? No, because LG, the other panel maker, also makes smartphones and tablets. Sure there are component suppliers without current aspirations in making the final product. But if you turn to them for all your component needs, who is to say you are not creating the next Acer?
post #24 of 39
Quote:
Originally Posted by stelligent View Post

Perhaps not, but there's clearly an element of irony in your sophomoric comment that escapes you. I would explain it to you, but is that the bell I hear? Recess is over. Time to return to your JK class.

Good catch. Consider the possibility that it is intentional and that some people find ironic juxtapositions humorous.
post #25 of 39
Quote:
Originally Posted by quinney View Post

Good catch. Consider the possibility that it is intentional and that some people find ironic juxtapositions humorous.

If it is well done, sure it can be funny. Except what you did is not even considered ironic juxtaposition.
post #26 of 39
Quote:
Originally Posted by stelligent View Post

Well, this is the sweet irony of the mobile space. No one can be truly independent. If you're not purchasing someone else's component, you are probably licensing their IP. All signs suggest that Samsung is making more profits making displays and flash memory for Apple than they are making tablets. Yet they keep churning out tablets - 7", 8.5", 10" ...

So, if Apple completely cuts off Samsung as a supplier, will that solve the problem? No, because LG, the other panel maker, also makes smartphones and tablets. Sure there are component suppliers without current aspirations in making the final product. But if you turn to them for all your component needs, who is to say you are not creating the next Acer?

The difference is that some companies can be trusted to keep secret information in the division that is supposed to have it rather than disseminating it far and wide. Samsung is obviously not one of those companies.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #27 of 39
Quote:
Originally Posted by benanderson89 View Post

Hello Samsung, your coffin is ready! Please step inside and we will begin hammering in the nails.

One employee, acting on their own behalf =/= Samsung doing anything wrong.
post #28 of 39
Quote:
Originally Posted by stelligent View Post

Perhaps not, but there's clearly an element of irony in your sophomoric comment that escapes you. I would explain it to you, but is that the bell I hear? Recess is over. Time to return to your JK class.

Quote:
Originally Posted by stelligent View Post

If it is well done, sure it can be funny. Except what you did is not even considered ironic juxtaposition.

You claimed my comment contained an element of irony. The juxtaposition was me appearing to defend myself against one insult (being dyslexic) while deliberately not defending myself against the other insult (being childish), thereby tacitly confessing to be childish. This is a very old format of joke, which many people will recognize quickly. I'm sorry you didn't think it was well done or funny, but it isn't like you paid good money to hear a comedian. I should warn you that future posts from me will probably contain humor of a similar skill level, so if you think it is going to upset you, the best thing for you to do is probably to add me to your ignore list.
post #29 of 39
Quote:
Originally Posted by jragosta View Post

The difference is that some companies can be trusted to keep secret information in the division that is supposed to have it rather than disseminating it far and wide. Samsung is obviously not one of those companies.

The company didn't leak the info, one employee did. Just like Apple didn't lose an iPhone prototype in a bar (twice) an Apple employee did.
post #30 of 39
Though Ive given up on the possibility of public lynchings, I do still contend that public spankings could help to issue some second sober thought by the likes of Mr. Hwang.

I see it now. Hwang stepping up to the Public Spanker in front of the judges bench. He pulls down his pants and postures himself over the Public Spankers knee. With grand ceremony, the PS begins to bring a moderate size board down upon Mr Hwangs behind for the number of strokes invoked by said judge.

Once finished, solemnly, the court adjourns.

* Though filming of trials are not allowed in my country, I should hope an exception be made in cases such as this.

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

Reply

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

Reply
post #31 of 39
Quote:
Originally Posted by mhikl View Post

Though Ive given up on the possibility of public lynchings, I do still contend that public spankings could help to issue some second sober thought by the likes of Mr. Hwang.

I see it now. Hwang stepping up to the Public Spanker in front of the judges bench. He pulls down his pants and postures himself over the Public Spankers knee. With grand ceremony, the PS begins to bring a moderate size board down upon Mr Hwangs behind for the number of strokes invoked by said judge.

Once finished, solemnly, the court adjourns.

* Though filming of trials are not allowed in my country, I should hope an exception be made in cases such as this.

hey now...I understand different strokes for different folks, and I truly will fight for your right to enjoy what you wish...but keep your sexual fetishes off these forums please \
post #32 of 39
Quote:
Originally Posted by mhikl View Post

Though Ive given up on the possibility of public lynchings, I do still contend that public spankings could help to issue some second sober thought by the likes of Mr. Hwang.

I see it now. Hwang stepping up to the Public Spanker in front of the judges bench. He pulls down his pants and postures himself over the Public Spankers knee. With grand ceremony, the PS begins to bring a moderate size board down upon Mr Hwangs behind for the number of strokes invoked by said judge.

Once finished, solemnly, the court adjourns.

* Though filming of trials are not allowed in my country, I should hope an exception be made in cases such as this.

Artist's renderings would certainly suffice in lieu of actual video.
Do you realize that fluoridation is the most monstrously conceived and dangerous Communist plot we have ever had to face? - Jack D. Ripper
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Do you realize that fluoridation is the most monstrously conceived and dangerous Communist plot we have ever had to face? - Jack D. Ripper
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post #33 of 39
Quote:
Originally Posted by Bancho View Post

Artist's renderings would certainly suffice in lieu of actual video.

OK. If it must be so.

I'm all for compromise.

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

Reply

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

Reply
post #34 of 39
I know one of the main principals involved in the case. Although he has no one to blame but himself, he has two very young kids.

From what I can tell, unlike most Wall Street criminals, he has not profited much for his family to survive if he's found guilty and gets a sentence close to the maximum.

Considering every one of 50 or so in similar cases have either pleaded guilty or been found guilty, and prosecutors want to make an example out of him, sadly, that seems highly likely.
post #35 of 39
Quote:
Originally Posted by filburt View Post

I know one of the main principals involved in the case. Although he has no one to blame but himself, he has two very young kids.

From what I can tell, unlike most Wall Street criminals, he has not profited much for his family to survive if he's found guilty and gets a sentence close to the maximum.

Considering every one of 50 or so in similar cases have either pleaded guilty or been found guilty, and prosecutors want to make an example out of him, sadly, that seems highly likely.

hey, you rob a bank for 200 bucks with a note they throw the book at you...you bankrupt America? You get bailed out and get a bonus...

good ol' justice. Blind yet greedy.
post #36 of 39


No, I'm not in CA but this; they were having lunch in Mountain View, CA and an Apple employees was thought to have heard the conversation. That's Apple ninja working secretively in nearby Google HQ for you.
post #37 of 39
Quote:
Originally Posted by Splash-reverse View Post



No, I'm not in CA but this; they were having lunch in Mountain View, CA and an Apple employees was thought to have heard the conversation. That's Apple ninja working secretively in nearby Google HQ for you.

Google?
post #38 of 39
How about Google's purchase of Motorola Mobility? They offered a 45% premium, but the stock price went up that amount 3 days before the announcement. Insider trading is a daily occurrence on wall street and nothing ever happens.
post #39 of 39
Quote:
Originally Posted by Stourque View Post

How about Google's purchase of Motorola Mobility? They offered a 45% premium, but the stock price went up that amount 3 days before the announcement. Insider trading is a daily occurrence on wall street and nothing ever happens.


You got your facts wrong, the day of the announcement the stock went up from ~$24 to ~$38. The deal was done in a week (unlike most deals where it months before the announcement) so there was not much opportunity for anyone to try and take advantage of it even if knowledge was leaking out. The increase coming the week prior ( ~$21 to ~$24) were due to market going up anyway. Mot Stock been trading around $24 for months so that was normal, plus look at the volumes nothing unusual there either.

Anyway, there has been rumors for months prior that Google maybe looking to buy a cellphone company. On the rumor list was RIM and Nokia. I can tell you I bought stocks on the buy out rumors in the past some paid off and others did not. If you look at RIM stock during this time it was going up even when they gave earning warning so people were trading on buyout speculation.
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