Louis Lanzano/Bloomberg NewsWalter Shimoon, a former employee at electronic manufacturer Flextronics, exits federal court in New York in January 2011.A technology executive charged with leaking sensitive information about Apple products to hedge fund traders pleaded guilty on Tuesday in Manhattan, the latest guilty plea in the government’s crackdown on insider trading facilitated by so-called expert networks.
Expert networks are matchmakers between industry experts and Wall Street money managers, facilitating calls and meetings between the two as a way to inform investors about various businesses. But federal prosecutors have been cracking down recently on some of these firms and the consultants they employ for allegedly sharing corporate secrets.
Walter Shimoon, a former employee at electronic manufacturer Flextronics, is the 12th person to plead guilty in the government’s investigation of expert network firms. Last week, a co-defendant, Mark Anthony Longoria, pleaded guilty while Winifred Jiau, a former consultant at an expert network firm, was convicted following a trial in Federal District Court in Manhattan.
Mr. Shimoon pleaded guilty to two counts of conspiracy to commit wire fraud and one count of security fraud. He is scheduled to be sentenced in July 2013.
Among the secrets Mr. Shimoon was accused of leaking were actual and forecast sales figures for iPhones and iPods in the third and fourth quarters of 2009. Flextronics manufactured chargers for the iPhone among other things, and as an employee, Mr. Shimoon was privy to nonpublic information about Apple’s supply chain.
In addition to sales figures, prosecutors said Mr. Shimoon also tipped a cooperating witness to Apple’s plans to develop a new iPhone. But later in the call, according to a transcript from prosecutors, Mr. Shimoon leaked word of an even more secret product in development, the iPad, which at the time was referred to as K48.
“So, you can get, at Apple you can get fired for saying K48…outside of a, you know, outside of a meeting that doesn’t have K48 people in it,” he told a cooperating witness, according to taped calls. “That’s how crazy they are about it.”