Former AT&T executive pleads guilty to insider trading charges

[Leeky]

Former AT&T marketing executive Alnoor Ebrahim pleaded guilty to charges of conspiracy to commit wire and securities fraud on Monday, following a US government investigation into an insider-trading scheme in which he leaked sales information about iPhone and BlackBerry smartphones to members of the investment community.

Ebrahim, 57, a US citizen born in Tanzania who resides in Alpharetta, Georgia provided information whilst working for AT&T as an associate director of channel marketing to an unknown company quoted only as an "expert networking firm" between 2008 and 2010, the Department of Justice said.

"I provided insider information concerning AT&T's sales of Apple's iPhone and RIM's Blackberry products, as well as other handset devices sold through AT&T distribution channels," Ebrahim told Manhattan District Judge Paul Oetken.

He had been paid over $180,000 for "consultation calls" with clients of the investment company. He was part of a so-called expert-network ring comprising of employees of specialist firms like Primary Global Research (PGR) who helped to funnel corporate secrets from companies such as AT&T to hedge funds.

Whilst the charges carry a maximum sentence of five years in prison, as part of a plea agreement, the Manhattan federal prosecutors recommended a maximum sentence of two years imprisonment.  In addition to this, he faces fines of around $250,000, or twice the gross gain or loss from the offense of conspiracy.

The DOJ also noted in court that as part of his plea agreement, the former AT&T executive has forfeited the proceeds earned during the course of the conspiracy. He will be sentenced on October 25.

AT&T also released a statement following the news in court, saying they "took this matter very seriously and cooperated fully with the authorities," according to AT&T spokesman Marty Richtman. "The conduct alleged was clearly against our code of business conduct, and Mr. Ebrahim is no longer an AT&T employee."

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https://www.techspot.com/news/49048-former-att-executive-pleads-guilty-to-insider-trading-charges.html

 

[psycros]

Makes you wonder if all he did was provide inside info or use his position to help pick the winners. Certainly AT&T has went out of its way to push the iPhone at the expense of everything else it sells, while at the same time carrying no Android devices that compare directly to a Blackberry.

 

[gwailo247]

Makes you wonder if all he did was provide inside info or use his position to help pick the winners.

That's basically what insider trading is.

 

[Tygerstrike]

As someone who works in the cellphone industry, I really dont see how the leak of information of that type warrents any real punishment. Its like telling one Banker what fruit and how many another supermarket sold last week. Its not terribly propriatory. Maybe Im not savvy enough to understand the full effects that such information leaked would cause. I could see if it was information that went to another major carrier, but it didnt. All that information imparts is what the consumer has been buying and is likely to buy given any certain trend. Trends I might add that change on a whim and as quickly as the newest flashiest commercial.

 

[Guest]

[FONT=Arial]Watch Trading Places; by getting insider information (information before it's released to the public) you can make better informed decisions. [/FONT]

[FONT=Arial]Let’s say you see that Widgets keep going up in price and Company A’s stock is climbing. You may want to invest in Company A. What if you found out though a high level employee at Company B before any public notification, that they just got awarded Company A’s widget contract. Which company are you going to invest in? Is it fair that you received this information before any public announcement? What happens to all the other investors that didn’t have this information?[/FONT]

[FONT=Arial]Investing is kind of like gambling, to make it legal and fair, we need some rules in place. One of them makes insider trading illegal.[/FONT]

 

[gwailo247]

As someone who works in the cellphone industry, I really dont see how the leak of information of that type warrents any real punishment. Its like telling one Banker what fruit and how many another supermarket sold last week. Its not terribly propriatory. Maybe Im not savvy enough to understand the full effects that such information leaked would cause. I could see if it was information that went to another major carrier, but it didnt. All that information imparts is what the consumer has been buying and is likely to buy given any certain trend. Trends I might add that change on a whim and as quickly as the newest flashiest commercial.

I think that part of it has to to with the level at which you are operating. There are probably all sorts of additional pieces of data which may make a difference about demographics of who is buying the phone, the trends they're seeing, what AT&T's orders will be for next year, whether sales are better/worse/as expected, there is tons of information that makes sense to the right person. Even information that would make a stock rise or fall a few dollars for a short time can be very valuable to the right person.

So if sales figures for the past quarter are about to be released, and they're very weak, and the stock usually drops when this happens, shorting sufficient numbers of a stock can make someone millions. I'm sure this happens constantly, but catching people is the problem.

 

[davislane1]

@Tygerstrike

By divulging how many phones the company is moving for Apple et al. the insiders can make easy money by taking positions in applicable stock ahead of announcements and then quickly dump the shares before the market settles down and reap a pretty nice reward. For example, if the iPhone sales start to slow AT&T is going to be one of the first entities to notice since they hold inventories. Insiders get the information ahead of the news, short large quantities of AAPL, and anyone long ahead of the headlines or economic announcements gets stuffed while the insiders make a nice, virtually risk-free pay day. Same thing if they can't keep the phones on the shelves: take on larger than normal long positions, wait for Apple to report record sales next week, dump them a few minutes or a couple hours after the announcement.