Robert Kwok, a former executive at Yahoo! conceded to plead guilty on insider trading charges made against him by federal prosecutors. The information was used by a fund manager, Reema Shah, to trade on company information that was to be kept secret. According to the Attorney’s Office, Manhattan, the two pleaded guilty at a federal court. US Securities and Exchange Commission (SEC) regulators were conducting civil proceedings parallelly. The SEC stated that a civil settlement is being pursued with the accused.
Kwok Tipped Shah About Impending Partnership between Microsoft and Yahoo!
Prosecutors reported that Kwok had tipped Shah illegally about a partnership impending in 2009 between Microsoft and Yahoo!. According to the SEC, Shah, who was an employee of Ameriprise Financial Inc’s subsidiary, then purchased 700,000 shares in Yahoo and cleared illegal profits of $389,000. Though Ted Cassman and Laura Grossfield, lawyers for Shah and Kwok, did not confirm this, Dana Lengkeek, a spokesperson for Yahoo! stated that Kwok left the firm early 2010.
Shah and Kwok to Face Jail Time
Having pleaded guilty to both counts – of committing securities fraud and conspiring – Kwok and Shah stand to face a prison term of five years. However, this can go up by twenty years for Shah, as he pleaded guilty to another charge – additional securities fraud.
In exchange for the information Kwok passed on to Shah, the fund manager told the former executive of Yahoo! about Autodesk’s (a design company) acquisition of Moldflow in 2008. Authorities stated that based on this information, Kwok made illegal profits of $4,754.
According to the terms of the deal for his plea, which is to be approved by a judge, Shah will not be allowed to work in the financial securities industry.
In 2009, when Kwok passed on insider information, he was senior director of Yahoo!’s business management department. The deal Yahoo! planned to strike with Microsoft was to have the technology used for Bing, power searches on the internet.
Christopher Morales is an experienced San Francisco Criminal Lawyer. To arrange for a consultation with a San Francisco White Collar Criminal Defense lawyer on a case, get in touch with us.