Jiau Found Guilty at Insider Trial

NEW YORK—A former technology consultant was convicted of insider-trading charges in the first trial stemming from a wide-ranging government probe of expert-network firms.

The verdict by the 12-member jury, in its second day of deliberations, is the latest victory for federal prosecutors as they seek to crack down on insider trading in corporate America.

Winifred Jiau, a former consultant for California expert-network firm Primary Global Research, was convicted of conspiracy and securities fraud. Sentencing is set for Sept. 21.

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Ms. Jiau, 43 years old, faces up to 20 years in prison on the securities fraud count and a possible five years on the conspiracy charge.

Federal prosecutors in Manhattan alleged that Ms. Jiau befriended company insiders and persuaded them to give her confidential financial information, which she passed along to hedge-fund managers. Expert-network firms link company insiders or industry experts with investors for a fee.

"It was a very difficult decision," said Susan Kohlmeyer, the jury foreperson.

Ms. Jiau is the ninth person to be convicted or to plead guilty to criminal charges in the expert-network probe. Joanna Hendon, her lawyer, said her client will appeal the verdict. Ms. Jiau remained in custody on Monday.

Her conviction came about a week after three hedge-fund traders were convicted of fraud and conspiracy in a separate insider-trading probe involving Galleon Group. Galleon founder Raj Rajaratnam was convicted of insider-trading charges in a separate trial last month.

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The U.S. Attorney's office in Manhattan has multiple insider-trading investigations ongoing. In the past 18 months, 49 hedge-fund managers and others have been charged with insider trading; 44 have been convicted or pleaded guilty.

Prosecutors alleged that Ms. Jaiu formed friendships with company insiders, including Sonny Nguyen, a former senior financial analyst at Nvidia Corp. She gave them gifts, including live lobsters and an iPhone to Mr. Nguyen, and took them to lunch, prosecutors said.

Ms. Jiau eventually suggested to Mr. Nguyen that they form a "club" to trade stock tips in exchange for nonpublic information, prosecutors said. Mr. Nguyen, who testified at trial, has pleaded guilty to criminal charges.

The information she got from her sources inside Nvidia and Marvell Technology Group Ltd. was so valuable and accurate—"to the decimal point," one prosecutor said—that her hedge-fund clients paid Ms. Jiau a monthly fee as high as $10,000 a month, prosecutors said.

She received, via money paid to the expert-network firm, about $208,000 over the length of the conspiracy which ran from 2006 to 2008, prosecutors said.

Ms. Jiau communicated with her hedge-fund clients—Samir Barai and Noah Freeman—in code, describing the inside information as "recipes" and the payments as "sugar," prosecutors said. Mr. Freeman and Mr. Barai have both pleaded guilty to criminal charges.

"She played a vital role," said Parbodh Sharma, a juror who works in the restaurant business. "She provided the information to the decimal. That's unheard of in the business world."

Ms. Hendon, Ms. Jiau's lawyer, had argued in her closing statement last Thursday that the information Ms. Jiau shared, while nonpublic, wasn't material, or important enough for a reasonable investor to base a trade.

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