GUILTY PLEA OF DONALD LONGUEUIL TO INSIDER TRADING CHARGES

United States Attorney
Southern District of New York
FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE
APRIL 28, 2011 ELLEN DAVIS, JERIKA RICHARDSON

PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that DONALD LONGUEUIL
pled guilty today to conspiracy and securities fraud charges
arising from an insider trading scheme in which he obtained and
traded on material, nonpublic information. LONGUEUIL
participated in this scheme while working as a research analyst
and a portfolio manager at two different hedge funds. During his
plea allocution and in his plea agreement, LONGUEUIL admitted
that, upon reading of the Government’s investigation in the
press, he destroyed and disposed of a flash drive and hard drives
relevant to his securities fraud conviction. LONGUEUIL pled
guilty before U.S. District Judge JED S. RAKOFF.
Manhattan U.S. Attorney PREET BHARARA stated: “Less
than three months after being arrested on insider trading
charges, Donald Longueuil has pled guilty. He is the latest
example of a privileged professional who thought he was above the
law and found out the hard way he surely was not. Insider
trading is a serious problem and a serious crime that we will
continue to prosecute.”
According to the Indictment, a Complaint previously
filed in this case, and statements made during today’s guilty
plea proceeding:
Between 2006 and 2010, LONGUEUIL, along with SAMIR
BARAI, a former portfolio manager at two hedge funds, JASON
PFLAUM, a former research analyst for BARAI, and NOAH FREEMAN, a
research analyst at a hedge fund and then a portfolio manager at
another fund, and their co-conspirators participated in a
conspiracy to obtain nonpublic information (“Inside
Information”), including detailed financial earnings, about
numerous public companies. These companies included Marvell
Technology Group, Ltd. (“Marvell”), NVIDIA Corporation
(“NVIDIA”), Fairchild Semiconductor Corporation (“Fairchild”),
Advanced Micro Devices, Inc. (“AMD”), Actel Corporation
(“Actel”), and Cypress Semiconductor Corporation (“Cypress”).
LONGUEUIL obtained Inside Information both from employees who
worked at these and other public companies, as well as from
independent research consultants who communicated with employees
at public companies. Often, the defendant and/or his coconspirators
used an “expert networking” firm to communicate with
and pay their sources of Inside Information. In addition,
although LONGUEUIL and his co-conspirators worked at separate
hedge funds, they had regular conference calls during which they
shared the Inside Information they learned with each other.
In May 2008, for example, LONGUEUIL obtained Inside
Information about Marvell from a co-conspirator and caused the
hedge fund where he worked to execute trades in Marvell. Based
on the Inside Information provided by LONGUEUIL, the hedge fund
realized trading gains of more than $1 million.
* * *
LONGUEUIL, 35, pled guilty to one count of securities
fraud based on his trading in Marvell, and one count of
conspiracy to commit securities fraud and wire fraud. The
conspiracy count carries a maximum sentence of five years in
prison, and the securities fraud count carries a maximum sentence
of 20 years in prison. He also faces a maximum fine of $250,000,
or twice the gross gain or loss from the offense on the
conspiracy count and a maximum fine of $5 million on the
securities fraud count. LONGUEUIL agreed as part of his plea
agreement to forfeit $1,251,685.15, representing the amount of
proceeds obtained as a result of the securities fraud offenses.
LONGUEUIL is scheduled to be sentenced by Judge RAKOFF
on July 29, 2011, at 4:00 p.m.
FREEMAN and PFLAUM previously pled guilty in Manhattan
federal court. Charges against BARAI remain pending and are
merely accusations. He is presumed innocent unless and until
proven guilty.
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 the investigation
of this case.
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
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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.
Assistant U.S. Attorneys AVI WEITZMAN and DAVID
LEIBOWITZ, and Special Assistant U.S. Attorney ANDREW Z.
MICHAELSON, are in charge of the prosecution.
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