How 2 Amazing Insider Tips On Apple Made An SAC Spin-Off Hedge Fund $560,000 In One Month

Photo: Louis Lanzano/Bloomberg

Walter Shimoon, a Primary Global (an expert network) consultant who pleaded guilty yesterday to charges of insider trading, allegedly gave 4 people secret information about Apple’s plans for the iPad and iPhone 4.Details about the tips Shimoon gave hedge fund clients are in a complaint embedded below.

A Flextronics employee (Flextronics supplied Apple’s cameras), Shimoon knew secrets like what Apple’s code word “K48” meant — big bucks for his hedge fund clients, who would pay him for any information that might tell them how to trade Apple stock.

He didn’t know “K48” meant “iPad,” yet, but he knew that project “K48” was so secret that anyone at Apple would get fired for saying the word outside of a meeting about K48.

One of Shimoon’s hedge fund clients, Kingdom Ridge Capital, a hedge fund founded by former SAC Capital employees Christopher Zepf (worked at SAC from 2002-2007 as a tech portfolio manager) and Brian Thonn (worked as an equity analyst)¬†located in White Plains, New York, allegedly made $560,000 trading Shimoon’s secrets in just one month, October 2009.¬†

The tips were amazing:

  1. Sales figures for Apple iPhone for the 3rd quarter of 2009
  2. Forecast sales for for Apple iPhone sales in the 4th quarter of 2009
  3. Forecast sales figures for iPod sales in the 4th quarter of 2009
  4. Sales forecast info for iPhone 4
  5. Information about the iPhone 4: that it would have 2 cameras and video conferencing technology

Shimoon gave the tips to CW-2 (tips #1-#5), Hedge Fund Employee-1 (tips #6&#7) and Hedge Fund Employee-2. One fund he gave tips to was Kingdom Ridge Capital.

None of the tipees are identified by the complaint, so we can’t tell which is the Kingdom Ridge employee or which tips Kingdom Ridge got. However Reuters says that a DOJ employee identified Kingdom Ridge as a hedge fund customer of Shimoon’s and that it made $560,000 in October 2009 by trading Shimoon’s Flextronics tips. Shimoon worked for Flextronics, Apple’s camera provider.

He learned about Apple’s sales forecasts as an employee of Flextronics. Reuters also says Shimoon was in contact with Nick Caputo at Kingdom Ridge.

The entire complaint is embedded below.

Insider Complaint 1216

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