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Analyst who leaked Apple sales projections arrested, charged for insider trading

post #1 of 27
Thread Starter 
A research analyst who allegedly obtained secret information about Apple and sold it for hundreds of thousands of dollars has been arrested and charged with securities fraud, conspiracy and insider trading.

John Kinnucan was charged with two counts of securities fraud and two counts of conspiracy on Friday in a U.S. District Court in Portland, Oregon, Reuters . A civil case filed by the Securities Exchange Commission filed in the U.S. District Court of Manhattan carries the insider trading charge.

Kinnucan, who was arrested on Thursday, is accused of leaking tips that he received from Apple suppliers such as SanDisk and Flextronics to hedge funds managers. According to the report, a source close to the government probe claims that the analyst had received tips from former SanDisk executive Don Barnetson, who pleaded guilty to conspiring to divulge company secrets on Friday.

"I conspired with a consultant to provide confidential information with respect to my employer at the time, SanDisk Corp," Barnetson said.

Investigators allege that Kinnucan paid sources between 2008 and 2010 to obtain confidential information, including sales trends for the iPhone, for his firm Broadband Research. Kinnucan gained notoriety in 2010 when it was revealed that he had alerted former and current clients about the insider-trading probe after refusing to cooperate with an FBI investigation.

He defended his actions in a 2010 interview by claiming that his clients were not "some scummy fly-by-night hedge funds." Kinnucan's clients are believed to have made approximately $1.58 million off of illegal trading based on tips he provided, while he allegedly made hundreds of thousands of dollars selling the information.

"John Kinnucan used financial incentives, fancy meals and other inducements to curry favor with public company insiders so they would serve up their employers' secrets," U.S. Attorney Preet Bharara said in a statement.

The federal probe, called Operation Perfect Hedge, has resulted in 60 people pleading guilty or being arrested, according to the report. Several former executives at Apple suppliers have been caught up in the probe. The former senior director of business development at Flextronics has been charged for providing "highly confidential" sales forecasts and details for an unreleased iPhone. A former Samsung manager testified last year that he had provided early information about Apple's iPad project to a hedge fund manager a month before it was announced.

In 2010, it was revealed that a number of analysts covering Apple were being investigated by the SEC for their "channel checks" with Apple's Asian supply chain. Analysts defended the practice as an industry standard, but the probe alleged that some had crossed the line into insider trading through their research.

[ View article on AppleInsider ]
post #2 of 27
Will this make other analysts think twice about being morons or just lying outright?

Probably not.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #3 of 27
How do they manage to get wrong all the time, then ? I suggest to charge them twice : one to steal protected information, another to lie, knowing that information !
post #4 of 27
Quote:
Originally Posted by Tallest Skil View Post

Will this make other analysts think twice about being morons or just lying outright?

Probably not.

You mean if prosecution acts as a deterrent? I'm sure it does. But I think there will always be unscrupulous traders out there.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #5 of 27
Is "fancy meals" another term for hookers?
Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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post #6 of 27
Quote:
Originally Posted by umrk_lab View Post

How do they manage to get wrong all the time, then ? I suggest to charge them twice : one to steal protected information, another to lie, knowing that information !

I think they're smart enough not to make themselves look good if they do have the inside scoop!
post #7 of 27
Quote:
Originally Posted by AppleInsider View Post

He defended his actions in a 2010 interview by claiming that his clients were not "some scummy fly-by-night hedge funds."

No one wants to believe they did bad things, but if your defense is "I'm not as bad as X", you should double check your rationale.

If this is how you react, then who is really going to sympathize?

http://www.bloomberg.com/news/2012-0...s-says-1-.html
post #8 of 27
In spite of the alleged info that this Anal-ists (not mispelled) are getting they still use their pea brains to get the estimates wrong.
post #9 of 27
Quote:
Originally Posted by hill60 View Post

Is "fancy meals" another term for hookers?

I think "fancy meals" is slang for cocaine. "Other inducements" are the hookers. I think.
post #10 of 27
Quote:
Originally Posted by Tallest Skil View Post

Will this make other analysts think twice about being morons or just lying outright?

Probably not.

But those aren't crimes. Leaking out what you are told is secret info is. Even if that info turns out to be lies.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #11 of 27
I love these analysts, it really doesn't take much to predict Apple will have stellar sales. So essentially he leaked information that most of us here already knew, Apple will sell big.
post #12 of 27
Good! They should investigate even more of those scumbags and arrest every single one of them that has been found to have engaged in anything illegal when it comes to stocks and trading.

They also deserve to get roughed up a bit and maybe raped every once in a while when they're in jail. These people are simple thieves who are stealing money from lots of honest people.

It's funny how poker is illegal online, yet the shadiest and most corrupt gambling scheme of all, the stock market, is fully legal. I used to play a bit of poker and things that were illegal in poker are all legal in the stock market, like bots. In poker, using a bot will get you banned for life from a site. In the stock market, using a bot is perfectly fine and totally legal.
post #13 of 27
Quote:
Originally Posted by AppleInsider View Post

[...] Investigators allege that Kinnucan paid sources between 2008 and 2010 to obtain confidential information, including sales trends for the iPhone, for his firm Broadband Research. [...]

And how many other analysts pay their sources for insider information? What, exactly, are the "checks" that analysts keep citing? As in "our checks indicate that Apple will blah blah blah..."

Analysts are all wannabe rock stars. Each looking for their big break in the industry. Shooting for their first big hit to establish their name. Amazing to me that more of them aren't busted for insider trading or industrial espionage.

Sent from my iPhone Simulator

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Sent from my iPhone Simulator

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post #14 of 27
Quote:
Originally Posted by Tallest Skil View Post

Will this make other analysts think twice about being morons or just lying outright?

Probably not.

It's the age-old temptation ... people lured by the the prospect of making big bucks the easy way, thinking that they can get away with it without anybody finding out. It's the same reason people keep on embezzling, despite the danger of serious prison time. There are still the otherwise smart people like the Bernie Madoffs who go for 30 years on Easy Street while they delude themselves that they can escape spending the rest of their lives in prison.

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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post #15 of 27
So who would think that you can DO that and not get caught?
post #16 of 27
Quote:
Originally Posted by SockRolid View Post

And how many other analysts pay their sources for insider information? What, exactly, are the "checks" that analysts keep citing? As in "our checks indicate that Apple will blah blah blah..."

Analysts are all wannabe rock stars. Each looking for their big break in the industry. Shooting for their first big hit to establish their name. Amazing to me that more of them aren't busted for insider trading or industrial espionage.

The enforcement division of the SEC is too small to really clean up all the corruption. They get just enough funding to bring a few cases a year to make it appear that they are enforcing the law. The legislators in Congress keep the purse strings pulled tight for this and other regulations which make things inconvenient for their patrons on Wall Street. Everybody enjoy your small government.
post #17 of 27
Quote:
Originally Posted by Ochyming View Post

So who would think that you can DO that and not get caught?

My guess is that the vast majority of the time, people do not get caught. Likely the whistleblower had an extreme incentive presented to them by the prosecutors. Otherwise, why kill the golden goose?
post #18 of 27
Quote:
Originally Posted by quinney View Post

The enforcement division of the SEC is too small to really clean up all the corruption. They get just enough funding to bring a few cases a year to make it appear that they are enforcing the law. The legislators in Congress keep the purse strings pulled tight for this and other regulations which make things inconvenient for their patrons on Wall Street. Everybody enjoy your small government.

Yeah, big government is what we need??

Maybe he should just run for congress, since insider trading is legal there.
Dr
Pepper
Crew
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Dr
Pepper
Crew
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post #19 of 27
Quote:
Originally Posted by LMGS View Post

Maybe he should just run for congress, since insider trading is legal there.

They should definitely investigate some of those bastards too, because there is a lot of shady and illegal stuff going on there that some of them are participating in. Those bastards shouldn't even be allowed to own any stock, not even a single share!
post #20 of 27
Quote:
Originally Posted by quinney View Post

The enforcement division of the SEC is too small to really clean up all the corruption. They get just enough funding to bring a few cases a year to make it appear that they are enforcing the law. The legislators in Congress keep the purse strings pulled tight for this and other regulations which make things inconvenient for their patrons on Wall Street. Everybody enjoy your small government.

Exactly.
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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post #21 of 27
Maybe they could also round up all the journalists at the majority of news sites?

They do seem to be rather selective in their news output.
post #22 of 27
Quote:
Originally Posted by Apple ][ View Post

It's funny how poker is illegal online, yet the shadiest and most corrupt gambling scheme of all, the stock market, is fully legal. I used to play a bit of poker and things that were illegal in poker are all legal in the stock market, like bots. In poker, using a bot will get you banned for life from a site. In the stock market, using a bot is perfectly fine and totally legal.


...I totally agree. Wall Street pricks are nothing more than mobsters, and the US Govt allows it, while banning online gaming, because they cannot tax it, and cannot 'own' it. ...SAme with natural drugs like weed!

Wall Street. The biggest criminal organization on the planet.
post #23 of 27
Quote:
Originally Posted by aBeliefSystem View Post

Maybe they could also round up all the journalists at the majority of news sites?

They do seem to be rather selective in their news output.

Do you care to explain how that is insider trading?
post #24 of 27
Little fish get fined and jail time, the big fish like goldman sachs get slapped on the wrist and plead without admitting guilt. What a great system.
post #25 of 27
Quote:
Originally Posted by hill60 View Post

Is "fancy meals" another term for hookers?

post #26 of 27
Quote:
Originally Posted by Satch99 View Post

Wall Street. The biggest criminal organization on the planet.

Thank you. You saved me writing a big post (my usual tirade against the financial industry). You summed it up in one.
post #27 of 27
I can't wait to here how the Apple Haters are going to make this all Apple's fault.
"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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