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FBI Arrests Tech Company Executives in Apple Trade Secrets Case

By Jason Beahm on December 29, 2010 | Last updated on March 21, 2019

Make no mistake, In House counsels need to jealously protect their employer's propriety data. Insider trading and other anti-corruption issues continue to drive this point home.

This week, federal prosecutors announced that they arrested four people and broadened their insider trading investigation regarding Apple's iPhone. Primary Global Research allegedly offered insights into industry trends, issues and regulations. The Mountain View, California-based company also allegedly revealed secrets about Apple and AMD technology to hedge funds in order to give them an unfair advantage in trading.

Consultants went so far as to establish a "corrupt clearinghouse for confidential information," New York prosecutors told the Associated Press. Primary Global executive James Fleishman was arrested and charged with wire fraud and conspiracy, and Mark Anthony Longoria, Walter Shimoon, and Manosha Karunatilaka, also face charges of conspiracy to commit securities fraud and wire fraud.

Through Primary Global, clients were able to learn about secret new product features for the iPhone, Apple sales forecasts and the then top-secret project for the iPad.

"[A] corrupt network of insiders at some of the world's leading technology companies served as so-called 'consultants' who sold out their employers by stealing and then peddling their valuable inside information," U.S. Attorney Preet Bharara said in a statement, the Associated Press reports.

"This wasn't market research. What the defendants did was purchase and sell insider information," said FBI Assistant Director Janice K. Fedarcyk.

The investigation offered new insight into just how far Apple is willing to go to protect company secrets, "At Apple you can get fired for saying K48 [the code name for the iPad] ... outside of a meeting that doesn't have K48 people in it. That's how crazy they are about it."

"I knew that when I was misappropriating Dell's confidential information and providing it to money managers, I was violating my duties of confidentiality and trust to Dell," said former Dell global supply manager Daniel Devore, who pleaded guilty to wire fraud and conspiracy charges, the Associated Press reports. Devore admitted that he received $145,000 to share inside information with the firm's clients and employees.

The case offers attorneys a stern reminder of the importance of protecting propriety data and making sure that they and their clients steer clear of anything that could be interpreted as insider trading or stealing company secrets.

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