Insider trading probe yields first charges

We've told you about the wide-ranging federal investigation of possible insider trading by hedge funds, investment bankers, consultants and others. Now that probe has yielded its first charges.

Four consultants have been charged with passing on inside information about prominent technology companies, including Apple, Dell and others, reports the Wall Street Journal.

The consultants worked for Primary Global Research, a Silicon Valley firm that hooks up hedge funds and investment banks with industry experts -- often former corporate employees -- who can provide trading tips.

One of the men charged, Mark Anthony Longoria, is a former supply-chain manager with Advanced Micro Devices. In a phone conversation cited in the complaint, Longoria allegedly explained to an investor how he came to know the information he was passing on: "Yeah, I've got a buddy that works in, in finance, that, uh, gives, uh, me all the, uh, nitty gritty details, probably more than I can understand."

The FBI claims that the consultants in this case were paid more than $400,000.

The probe is continuing, and the government is said to be trying to gather evidence against major Wall Street hedge funds.

As we've written, the cases will probably turn on the issue of what's public information. Hedge funds and other investors have long used a wide array of methods to get access to information that could give them an investing edge. But if they get information directly from an insider at a company, and then use that information to invest in the company and profit, they may have run afoul of the law. As may the insider who supplied the information.

("Dragnet" photo: AP)