United States Attorney
Southern District of New York
SEPTEMBER 20, 2011 ELLEN DAVIS,
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that JAMES FLEISHMAN, an
executive for an “expert-networking” firm (the “Firm”), was found
guilty today in Manhattan federal court of conspiracy charges in
connection with a scheme to provide confidential information,
including material, nonpublic information (“Inside Information”),
to the Firm’s clients, including hedge funds. FLEISHMAN was
convicted after a three-week jury trial presided over by U.S.
District Judge JED S. RAKOFF.
Manhattan U.S. Attorney PREET BHARARA said: “Once
again, a jury of twelve men and women has recognized insider
trading for the crime that it is. Today’s swift guilty verdict
underscores that the business model embraced by James Fleishman
was nothing more than an attempt to gain a criminal trading edge
over the average investor.”
According to the evidence admitted at trial, the
Indictment, and the Complaint previously filed in this case:
The Firm advertised itself as an investment research
firm with a roster of consultants with experience in various
industries, including the technology industry, who could provide
clients of the firm, including hedge funds, with “up-to-theminute
intelligence on trends, issues, regulations and dynamics”
affecting particular companies or industries.
In truth and in fact, certain of the Firm’s
consultants, many of whom were insiders at public companies,
passed confidential information, including Inside Information, to
Firm clients in breach of the duties trust and confidence that
those consultants owed to their employers.
FLEISHMAN served as a Sales Manager for the Firm and
was responsible for attracting new clients and providing service
to existing clients. FLEISHMAN promoted the Firm’s consultation
services by arranging for clients to speak with consultants
knowing that consultants would provide confidential information,
including Inside Information, to clients. FLEISHMAN also
obtained and passed Inside Information from certain Firm
Consultants directly to certain hedge fund clients.
* * *
FLEISHMAN, 42, of Santa Clara, California, was
convicted of one count of conspiracy to commit securities fraud
and one count of conspiracy to commit wire fraud. He faces a
statutory maximum of 25 years in prison. Count One carries a
maximum sentence of five years in prison, and Count Two carries a
maximum sentence of 20 years in prison. FLEISHMAN also faces a
maximum fine of $250,000, or twice the gross gain or loss from
the offense on each of Counts One and Two, as well as forfeiture
of the proceeds he obtained as a result of the offenses.
FLEISHMAN is scheduled to be sentenced by Judge RAKOFF
on December 21, 2011, at 4:00 p.m.
Mr. BHARARA praised the investigative work of the
Federal Bureau of Investigation, and thanked the U.S. Securities
and Exchange Commission for its assistance in this matter.
This case was brought in coordination with President
BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which
Mr. BHARARA serves as a Co-Chair of the Securities and
Commodities Fraud Working Group. President OBAMA established the
interagency Financial Fraud Enforcement Task Force to wage an
aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. The task force includes
representatives from a broad range of federal agencies,
regulatory authorities, inspectors general, and state and local
law enforcement who, working together, bring to bear a powerful
array of criminal and civil enforcement resources. The task
force is working to improve efforts across the federal executive
branch, and with state and local partners, to investigate and
prosecute significant financial crimes, ensure just and effective
punishment for those who perpetrate financial crimes, combat
discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.
This case is being handled by the Office’s Securities
and Commodities Fraud Task Force. Assistant U.S. Attorneys
ANTONIA M. APPS and DAVID S. LEIBOWITZ are in charge of the