Accounting Manager Charged in Insider Trading Spree

Former Nvidia Accounting Manager is Charged with Tipping Confidential Information in Insider Trading Spree

May 16, 2014 — Inside employees in a company’s accounting department often come into possession of nonpublic information that could be misused for personal gain. But insider trading is a crime. To discourage illegal insider trading, the U.S. Congress established a whistleblower program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Tipsters who collaborate with the Securities and Exchange Commission (SEC) about insider trading may be rewarded for their courage in notifying the government. Whistleblowers may receive rewards as high as thirty percent of the amount the government recoups, provided the recovery tops $1 million.

Hedge Funds Exploited Nvidia Nonpublic Information to Reap $16.5 Million in Profits and Avoided Losses

Insider trading charges have been filed against Chris Choi, a former accounting manager at Nvidia Corp., who tipped a friend, Hyung Lim, with confidential information about Nvidia’s impending quarterly earnings announcements. Choi’s tips allegedly triggered a domino effect of repeated tipping and illegal trading by a group of hedge fund traders who made around $16.5 million in illicit profits and avoided losses.
Choi, who lives in San Jose, California, allegedly made a habit of tipping Lim with confidential information about Nvidia’s revenues, profit margins and other financial data. When Choi tipped Lim with nonpublic information about the technology company’s financial performance in advance of its 2009 and 2010 quarterly earnings announcements, Lim passed along the information at a poker game to Danny Kuo, then a hedge fund manager at Whittier Trust Company. Kuo used the insider information to make illegal trades for his firm and then forwarded the tips to analysts at other firms. The analysts, in turn, provided their portfolio managers with the information, which resulted in even more insider trading in Nvidia securities.
The SEC had already charged the recipients of Choi’s tips, Lim and Kuo. Choi has consented to settle the charges recently filed against him.

Whistleblowers Notify SEC about Illegal Tips of Confidential Information

Accounting department insiders with knowledge of insider trading schemes should become familiar with the Dodd-Frank whistleblower process before they notify the SEC. The qui tam attorneys at Waters & Kraus are committed to safeguarding whistleblowers’ rights in insider trading cases. Contact us by email or phone our SEC fraud lawyers at 855.784.0268 to discuss how we can assist you.

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