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SEC: Los Altos Resident's Nvidia Tips Were Illegal

The Securities and Exchange Commission said poker acquaintances used upcoming quarterly earnings report to benefit a multi-million hedge fund.

 

The SEC has charged a Los Altos man with illegally tipping a hedge fund manager with inside information about Santa Clara-based Nvidia Corp.'s quarterly earnings. 

 Hyung Lim, 46, was charged by the Securities and Exchange Commission with illegally passing information on earnings to hedge fund manager Danny Kuo, according to the SEC.

Kuo, 36, met Lim during poker parties in 2009 arranged by a mutual friend the SEC complaint says, in a detailed description of the Lim-Kuo relationship and how others benefitted. He allegedly gave that information to hedge fund advisory firms Diamondback Capital Management LLC and Level Global Investors LP.

The SEC's complaint alleges Kuo and the other recipients of the company tips, traded on Nvidia based on that non-public information. Nvidia develops and sells graphics processors used in video games systems, smart phones, tablets and other computing devices. 

During "at least" 2009 and 2010, Lim got the contents of the non-public information about quarterly earning's announcements from a friend who worked in the Nvidia's accounting department, described as "Nvidia Insider in the complaint. Lim allegedly passed on this information multiple times," according to the complaint by SEC Sanjay Wadwa attorney, including the company's "internal calculations of its revenue, gross profit margins and other financial metrics it later disclosed to the public in its quarterly earnings report," and that Lim was compensated with at least $15,000 from Kuo and "material nonpublic information about a corporate acquisition, which Lim used to make profitable trades," about $11,000.

The complaint said that Kuo used the information to benefit his employer, described only as "Investment Adviser B," a private trust company and unregistered investment advisor based in South Pasadena and Reno, Nev. Kuo allegedly shared that information with other investment professionals, including Spyridon "Sam" Adondakis, then a New York analyst at Level Global, and Jesse Tortora, then an analyst at investment adviser Diamondback.

Payments to Lim were described in the complaint. On one occasion, the complaint says, Kuo wired $5,000 to a Las Vegas casino to pay a debt of Lim's. Later, Kuo made two cash payments of $5,000 each.  

The SEC alleges that Kuo's employer, "Investment Adviser B" earned profits of $44,000 in 2009 and $105.000 in 2010, and avoided losses of at least $90,000. It alleges that Diamondback made at least $73,000 and reaped profits and avoided losses of $15.6 million.

commuter September 06, 2012 at 09:31 PM
How much money did this unnamed investment company make off of the insider information? Is Lim an employee of Nvidia? If not, how did he get the insider information?
randy albin September 06, 2012 at 10:15 PM
los altos once was "middle-class." there are financial heavyweights in and around los altos now. all of them can wake up early in the morning to follow the markets and morningstar value ratings guide to keep track of the investment portfolios and asset allocations
L.A. Chung (Editor) September 07, 2012 at 04:04 AM
I'll update the story. It's spelled out in the complaint, but Lim allegedly had a person inside Nvidia providing that information.
commuter September 09, 2012 at 03:22 PM
Seems to me that the unnamed investment company and the unnamed Nvidia employee are even more guilty than the people named in this complaint.

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