Alnoor Ebrahim, who was described as director of channel marketing and sales operations for AT&T Mobility's wireless group in a report from The Wall Street Journal, admitted that he worked as a consultant for "expert-network" group Primary Global Research LLC and shared private corporate information with the firm between 2008 and 2010. In return for his insider insight Ebrahim was paid about $180,000.
"I knew that what I was doing was wrong," Ebrahim said. "I knew I breached my fiduciary duty to AT&T."
Ebrahim, a naturalized U.S. citizen originally from Tanzania, entered a guilty plea to one count of conspiracy to commit securities fraud and wire fraud. The trial is an extension of a previous insider trading case involving former PGR sales manager James Fleishman who is currently appealing a two-and-a-half year sentence over conspiracy charges.
The news is the latest development in an ongoing government crusade against insider trading and "expert-network" rings. In the illegal system, firms like PGR charge a fee to connect hedge fund managers and other traders with industry experts who have access to private corporate information. Most recently the initiative caught its biggest fish yet when former Goldman Sachs Group Inc and Procter & Gamble Co. board member Rajat Gupta was found guilty of insider trading on Friday.
As part of an FBI probe, Ebrahim was caught on tape dispensing sensitive information to Karl Motey, a former independent financial consultant who pleaded guilty to similar insider trading charges in December 2010. Motey also testified at the Fleishman trial and has worked with government in the investigation. During the recorded 2009 phone call, Ebrahim is heard confirming that AT&T was on pace to sell 2.2 million iPhones in the fourth quarter. AT&T reported in January 2010 that it had activated 3.1 million iPhone 3GS handsets in the fourth quarter of 2009.
Ebrahim admitted to leaking sales information regarding AT&T's iPhone 3GS.
At the Fleishman trial, Ebrahim's former boss and AT&T Director of Product Marketing Gary Duffy outlined the damage a lead of this nature could have on the telecom.
"Well, it's harmful if the companies that we kind of partner with, like a RIM or an iPhone, if they don't believe that the information that we're sharing together to bring a device to market, if they don't believe that that is going to be held in confidence and that we are going to release information jointly and at an agreed upon time, then my sense is they're going to be very apprehensive to want to launch really important, cool devices with us," Duffy said.
The expert-network case is ongoing and 63 of the 69 suspects charged have pleaded guilty or been convicted of their respective charges. Ebrahim's sentencing is scheduled for Oct. 25.