The investigation of a Goldman Sachs Group Inc analyst shows US officials have intensified their focus on banks and Taiwan in a multiyear insider-trading probe that has implicated hedge funds, technology company employees and consultants, a person familiar with the matter said.
The investigation of Henry King (金文衡), the Goldman Sachs analyst covering Taiwan, shows US federal authorities are expanding the insider-trading probe by US Attorney Preet Bharara in Manhattan and the FBI in New York, said the person, who did not want to be identified because the matter is not public.
The probe, called operation “Perfect Hedge,” began five years ago and has resulted in insider-trading and securities fraud charges being filed against 64 people, with more than 50 either pleading guilty or being convicted at trial since 2009. They included Galleon Group LLC co-founder Raj Rajaratnam, who is serving an 11-year prison term.
King did not answer calls to his Hong Kong office number on Wednesday. E-mails to his company account received an auto-reply saying he was out of the country on a personal matter. Goldman Sachs spokesman Michael DuVally declined to comment on the investigation of King, or whether he remains a bank employee or is on leave.
King, based in Hong Kong, covers Taiwanese companies including Quanta Computer Inc (廣達) and Compal Electronics Inc (仁寶), the world’s two largest manufacturers of notebook computers for clients including Hewlett-Packard Co and Dell Inc, according to data compiled by Bloomberg.
Other companies that King covers include Hon Hai Precision Industries Co (鴻海) and Pegatron Corp (和碩), the only two assemblers of Apple Inc’s iPhones; Catcher Technology Co (可成) and Foxconn Technology Co (鴻準), the major suppliers of metal casings for laptops and cellphones; China’s Lenovo Group Ltd (聯想), the world’s second-biggest maker of personal computers; and Taiwan’s Acer Inc (宏碁), the world’s fourth-biggest PC maker.
King, who joined Goldman Sachs in 2002, was named head of Taiwan research in 2005.
Bharara’s office in October indicted Rajat Gupta, a former Goldman Sachs and Procter & Gamble Co director on charges of leaking material, nonpublic information to Rajaratnam about the two companies. Gupta has denied wrongdoing.
Prosecutors said in a Feb. 3 letter to US District Judge Jed Rakoff, who is presiding over Gupta’s case in Manhattan, that they had witness statements that there was a second “insider” at Goldman Sachs who leaked tips to Rajaratnam that “did not relate to Goldman and/or Procter & Gamble.”
Gupta’s lawyer, Gary Naftalis, declined to comment about King, or other Goldman Sachs sources Rajaratnam might have had for illegal tips. Naftalis has said in court that he should be permitted to use such information while defending Gupta at trial.
Since at least 2004, incidents of analysts dealing in confidential chip-production data have occurred at the Taipei offices of banks including JPMorgan Chase & Co and Lehman Brothers Holdings Inc, said six people in the finance industry with knowledge of the events, who asked not to be identified to protect their business relationships.
Testimony about fund managers receiving such tips from Asia arose in three insider-trading trials in New York stemming from the Perfect Hedge investigations.
Adam Smith, a former Galleon portfolio manager who worked for Rajaratnam, testified at last year’s trial of the Galleon co-founder that part of his job was “getting the number,” or learning revenue figures before they became public from company insiders at Intel Corp, Intersil Corp, Synaptics Inc and other publicly traded companies.