Head of Oregon Investment Research Firm Pleads Guilty to Securities Fraud
in NY Over Insider Trading Scheme
John Kinnucan, President of Oregon-based investment research firm Broadband
Research, LLC, pled guilty this week to conspiracy and two counts of securities
fraud in connection to an insider trading scheme that authorities say
included several co-conspirators.
According to the U.S. Attorney’s Office, Kinnucan obtained material,
non-public information about publicly traded companies by befriending
public company employees. He then offered them consulting fees and/or
other non-monetary compensation in exchange for private information. Once
the information was in hand, Kinnucan turned around and sold the information
to Broadband’s clients as if it had come from legitimate research.
Additionally, in order to cover up his fraudulent activity, Kinnucan lied
to existing and prospective clients about how he got his information.
Specifically, he falsely stated that none of his sources was employed
at a public company and that he did not pay any of his sources for information.
When he realized his lies hadn’t paid off, he made nearly 25 threatening
phone calls to prosecutors and other agents involved in investigating
his activities. In addition to making repeated references to genocide
and violence, he specifically threatened one female prosecutor with physical harm.
“John Kinnucan engaged in an orchestrated campaign to obstruct a
federal investigation into his illegal conduct, the very conduct for which
he now stands convicted,”
said Manhattan U.S. Attorney Preet Bharara in a press release. “Today [July 25] the truth came out of his own mouth, and he admitted
that he is a securities fraudster, and his attempts to obstruct justice
in a repugnant and disturbing manner were ultimately fruitless.”
Kinnucan’s plead was entered in New York before U.S. District Judge
Deborah A. Batts. He faces a potential 45 years in prison and a fine of
$5 million or twice the gross monetary gain or loss arising from his conduct.
His sentencing hearing is scheduled for Jan. 15, 2013.