Securities Law

Visited By FBI in Big Insider-Trading Probe, Researcher Explains 'Why I Chose Not to Wear a Wire'


As federal authorities step up the pace in a three-year-old insider-trading investigation of the financial industry that reportedly could be record-breaking in scope, a Portland, Ore., independent research analyst has been making headlines by going public with his refusal to wear a wire when approached by FBI agents.

John Kinnucan first hit the news after the Broadband Research principal e-mailed clients to let them know he’d been visited by the feds but wasn’t going to cooperate with their request to be an undercover witness. One reason why: The FBI agents didn’t ask nicely, he explains today in a guest column for the DealBook blog of the New York Times.

Additionally, Kinnucan says, he doesn’t believe he’s done anything wrong:

“The type of research I provide to clients is pervasive in the financial community,” he writes, “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.”

By sending an e-mail about his Oct. 25 encounter to some 20 hedge-fund and mutual-fund clients, Kinnucan apparently exposed the investigation earlier than the feds had intended, after the Wall Street Journal picked up the story last week. This in turn forced the FBI to pick up the pace and conduct some investigatory raids, according to TPM Muckraker.

Kinnucan hasn’t been charged, but all of his clients departed after getting his e-mail, reports Bloomberg in an article discussing the so-called expert network issue.

Earlier coverage:

ABAJournal.com: “Feds Start Raids in Massive 3-Year Insider-Trading Probe of Financial Industry”

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