Research Analyst Who Publicly Refused to Wear FBI Wire Is Arrested in Insider Trading Case
A research analyst who made headlines in 2010 when he emailed clients to say he’d refused to wear a wire after being requested to do so by FBI agents for a national insider-trading probe was arrested yesterday at his Portland, Ore., home.
John Kinnucan, 54, who founded Broadband Research LLC, is charged with with conspiracy to commit securities fraud, conspiracy to commit wire fraud and two counts of securities fraud, Bloomberg reports.
He is being held in the Multnomah County Jail, pending an appearance in federal court in Oregon. The charges against him were filed in U.S. District Court in Manhattan.
His arrest follows those of some 60 others in a so-called Operation Perfect Hedge federal probe and apparently relates to a controversial interpretation of how securities law applies to those, such as Kinnucan, who are in the business of analyzing information and advising clients concerning stock purchases, according to Reuters.
The feds contend that Kinnucan served as a conduit for the transmission of information used by clients for illegal insider trading from companies whose stock they purchased.
“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,” said U.S. Attorney Preet Bharara in a written statement
However, Kinnucan has previously said that he did nothing wrong. “The type of research I provide to clients is pervasive in the financial community,” he wrote in a 2010 guest column for the DealBook blog of the New York Times, “the same kind of analysis provided not only by all investment banks, large and small, but by an ever-expanding group of research boutiques, virtually all larger than mine.”
Attorney Nathan Burney, who represents Kinnucan, did not immediately reply to a comment request from Reuters.
In connection with the charges against Kinnucan, an executive of a public technology company reportedly pleaded guilty today in federal court in Manhattan to providing Kinnucan with insider information.
The Associated Press and DealBook also have stories.
Earlier coverage:
ABAJournal.com: “Visited By FBI in Big Insider-Trading Probe, Researcher Explains ‘Why I Chose Not to Wear a Wire’”
