[ by Howard Haykin ] The SEC on Tuesday, charged Tai Nguyen, owner of Insight Research, a CA-based equity research firm, with insider trading, stemming from the SEC’s ongoing investigation of insider trading involving so-called “expert networks” that provide specialized information to investment firms. SEC Findings and Allegations. Nguyen allegedly from 2006 through 2009, frequently traded in the securities of Abaxis, Inc., based on inside information - including revenues, gross profit margins and EPS - received from a close relative employed in the finance department of that firm.  He repeatedly traded for himself in advance of the company’s quarterly earnings announcements after receiving key data in those announcements.  From these trades, he supposedly earned $145,000 in illicit profits. Nguyen also passed that same information to hedge fund managers who were clients of Insight Research - namely, New York-based Barai Capital Management and Boston-based Sonar Capital Management.  As clients of Nguyen’s firm, Insight Research, they each paid the firm thousands of dollars each month in fees.  And they both traded Abaxis securities using the same quarterly inside information, and generating on a combined basis in excess of $7 million in illicit gains for their hedge funds.

"Nguyen claimed expertise in researching and analyzing technology companies, but his special edge was his willingness to break the law. Like many other so-called ‘experts’ who trafficked in inside information, Nguyen now finds himself the subject of an enforcement action."  -- Sanjay Wadhwa, Associate Director of the SEC’s NY Regional Office, Deputy Chief of Market Abuse Unit.

SEC Charges and Sought-After Sanctions. Nguyen was charged with violating the anti-fraud provisions of U.S. securities laws and the SEC seeks to disgorge him of all ill-gotten gains, along with prejudgment interest and financial penalties.  They also seek to bar hims from such future violations.   The SEC investigation is continuing. SEC Staff Credits. Investigation by Daniel Marcus and Joseph Sansone in the Market Abuse Unit in New York, with Matthew Watkins, Neil Hendelman, Diego Brucculeri, and James D’Avino of the NYRO. For further details, go to:   [SEC PR 12-121, 6/26/12] and [SEC Complaint].