Taiwan Insider Trading

Taiwan Insider Trading

Taiwan Chip Producers at Center of Insider Trading Probe

Several hedge funds and investment firms have been ensnared in the insider trading investigation and it appears that much of the disputed tips and inside knowledge originated in Taiwan. Bloomberg reports that Taiwan--home to many producers of chips used in major products like Dell computers and the iPhone--is a veritable hotbed of underground research and insider data and is being considered a big source for some of these technology investments under scrutiny. But this does not seem to be a new issue, as complaints about insider tips from Taiwan have been filed since at least 2004.
The U.S. insider-trading investigation that began last year with the arrest of the head of Galleon Group LLC is shedding new light on this nexus of underground research and offshore manufacturing. Last week, a U.S.-based employee of Taiwan’s biggest chipmaker, moonlighting as a consultant for Primary Global Research LLC, was charged with providing material, nonpublic information to investors. Last month, a Primary Global employee with ties to Taiwan was arrested in the probe.

While the Taiwan connection is just emerging in complaints filed by the U.S. Attorney in Manhattan, the nation’s black market for business intelligence and its appeal to hedge funds looking for an advantage are well-established. Since at least 2004, incidents of analysts dealing in confidential chip- production data have occurred at the Taipei offices of banks including JPMorgan Chase & Co. and Lehman Brothers Holdings Inc., said six people in the finance industry with knowledge of the events, who asked not to be identified to protect their business relationships. Source

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