Arrest made in insider trading case

Impossible to know where all this leads, but the feds have picked up an executive at a California firm in connection with a massive insider trading investigation that seems to grow bigger by the day. Don Ching Trang Chu was arrested just days before he was scheduled to leave for Taiwan. He apparently has lots of contacts in the wireless broadband business. From the WSJ:

Mr. Chu was listed earlier this week as an Asia expert on the website of Primary Global Research LLC. The Mountainview, Calif.-based firm, which was not identified by prosecutors in their complaint against Mr. Chu filed Wednesday, pairs hedge funds and other investment companies with current and former employees at publicly traded corporations to provide insight into their companies and industries.

Prosecutors say that Chu arranged for the firm's consultants to provide inside information about earnings releases. Primary Global is one of several "expert" firms that are being examined by federal agents who stepped up their inquiries after the Journal reported on the case over the weekend. Blogger Henry Blodget says there are so many people involved in this thing that the "everybody did it" defense might be invoked. "There will be safety in numbers," he writes. "Ultimately, the firms will just have to pay some money and promise not to engage in the practice again."

Here's a key point in the complaint from an FBI agent involved in the case:

There is probable cause to believe that CHU promotes the Firm's consultation services by arranging for Firm consultants to provide material nonpublic information regarding certain public companies releases of significant financial information or other market-moving events (the "Inside Information") for the purpose of executing profitable securities transactions, where such Inside Information has been disclosed by individuals in violation of their fiduciary and other duties to their employers.