WHEN: Today, Thursday, December 16th
WHERE: CNBC's "The Call"The following are excerpts from the unofficial transcript of breaking news from CNBC's Kate Kelly. All references must be sourced to CNBC.
KATE KELLY: I'M KATE KELLY WITH BREAKING NEWS ON THE CONTINUING SLEW OF ARRESTS IN THE INSIDER TRADING CASE. WE HAVE KNOWLEDGE FOUR INDIVIDUALS HAVE BEEN ARRESTED THIS MORNING IN LOCATIONS AROUND THE U.S., NOT NECESSARILY IN NEW YORK. THEIR NAMES, WALTER SHIMOON, MARK ANTHONY LONGORIA KNOW AS TONY LONGORIA, MANOSHA KARUNATILAKA, SORRY, I'M NOT GETTING THE NAME QUITE RIGHT, AND JAMES FLEISHMANN. FIVE DIFFERENT COUNTS, I'M TOLD ONE OF SECURITIES FRAUD, FOUR WIRE FRAUD AND THERE WILL BE MORE DETAILS COMING AS SOON AS WE GET THEM. I'M GOING TO KEEP YOU POSTED.
TRISH REGAN: ANY IDEA WHAT THE AMOUNT OF MONEY THAT'S AT STAKE HERE?
KELLY: I DON'T HAVE A SENSE OF THAT YET BUT I'M TRACKING THAT THROUGHOUT THE MORNING. I'M TOLD IT'S TENS OF MILLIONS, THAT'S WHAT WE'VE HEARD PREVIOUS TO NOW. THAT'S WHAT THE "WALL STREET JOURNAL" ORIGINALLY REPORTED BUT I'M SURE THE NUMBER WILL GET SPECIFIC.
MELISSA FRANCIS: KATE IS THIS PART I'VE LARGER INVESTIGATION. IS THIS A TREND? WHAT ARE WE SEEING RIGHT NOW?
KELLY: YOU KNOW IT'S INTERESTING, WE WERE EXPECTING QUITE A FEW ARRESTS THIS WEEK. FOUR THAT WE KNOW OF TODAY. THERE COULD BE MORE COMING. NOT ENTIRELY CLEAR WHEN. IT SEEMS TO BE A BROAD RANGING INVESTIGATION. THE FOCUS HAD BEEN ON HEALTH CARE UP UNTIL NOW AS FAR AS WE KNEW, BUT WHAT I'M HEARING TODAY IS THAT A NUMBER OF TECHNOLOGY COMPANIES WERE INVOLVED INCLUDING AN EMPLOYEE WHO WORKED AT AMD WHO MAY HAVE PASSED ON INFORMATION. I'LL BE TRACKING THAT AND I'LL GET BACK TO YOU WITH MORE. BUT TECHNOLOGY SEEMS TO BE THE FOCUS IN CONNECTION WITH THESE FOLKS I JUST MENTIONED.
LARRY KUDLOW: SO KATE ARE THESE RESEARCH CHANNELS, THESE PRIVATE INVESTMENT CONSULTING OPERATIONS, IS THAT WHAT THIS IS ABOUT?
KELLY: YES, THIS TACKLES EXPERT NETWORKS, WHICH ARE THE GROUPS OF PEOPLE THAT PROVIDE INFORMATION AND INSIGHT AND COLOR TO PROFESSIONAL INVESTORS. THE QUESTIONS BEING OF COURSE DO THEY DO SO LEGALLY. THAT'S WHAT'S AT ISSUE IN THIS INVESTIGATION. BUT ALSO PEOPLE AND THE INFORMATION FLOW, OF COURSE, THE COMPANIES THAT ARE -- THAT HAVE INFORMATION TO BE GIVEN OUT, THOSE PEOPLE THAT WORK THERE THAT MAY NOT BE KEEPING THEIR OWN COUNSEL.
REGAN: WHO DO THOSE PEOPLE GET WORK FOR?
KUDLOW: DO THOSE PEOPLE GET BUSTED-- THE PEOPLE IN THE FIRMS WHO GAVE UP THE INFORMATION, DO THEY GET BUSTED ALSO?
KELLY: WELL, THAT'S THE KEY QUESTION, OF COURSE. YOU WOULDN'T BRING AN INSIDER TRADING CASE, I'M TOLD BY LAWYERS UNLESS YOU THOUGHT THAT BOTH THE TIPPER AND THE TIPPEE KNEW WHAT THEY WERE DOING AND WERE ON THE WRONG SIDE OF THE LAW. I THINK THE ARRESTS THIS MORNING TOUCH ON ALL PARTS OF THE CHAIN, BOTH PEOPLE WITHIN COMPANIES OR CONSULTANTS TO COMPANIES AS WELL AS EXPERT NETWORKS AND TRADERS, MAYBE EVEN SOME WALL STREET ANALYSTS. I'M JUST DRILLING DOWN ON THE INFORMATION THOUGH.
REGAN: I MEAN THESE PARTICULAR GUYS, DO WE KNOW WHO THEY WORK FOR, WHAT FIRM THEY WORK FOR?
KELLY: WE ARE WORKING ON THOSE DETAILS RIGHT NOW, BUT I DON'T HAVE THEM TO SHARE AT THE MOMENT.
REGAN: ALRIGHT KATE KELLY THANK YOU VERY MUCH FOR BRINGING THAT TO US. WE'LL CONTINUE TO CHECK IN WITH YOU.
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KELLY: WELCOME BACK TO "THE CALL." I'M KATE KELLY WITH THE LATEST DEVELOPMENTS ON THE FBI ARRESTS TODAY. WE HAVE LEARNED THAT ALL FOUR PEOPLE ARRESTED EARLIER TODAY WERE FORMERLY EMPLOYED BY PRIMARY GLOBAL, THE EXPERT NETWORK FIRM IN MOUNTAIN VIEW, CALIFORNIA. A FEW MORE DETAILS ON WHO IS WHO AS PART OF THIS INVESTIGATION. JAMES FLEISHMAN, FORMERLY A SALES MANAGER WITH PRIMARY GLOBAL CONSULTANTS WHO HELPED MANAGE THE NETWORK OF EXPERTS WHO PASSED ON INFORMATION ABOUT COMPANIES. THE QUESTION, OF COURSE, BEING WHETHER IT WAS PROPER OR IMPROPER. ACCUSED HERE OF IT HAVING BEEN IMPROPER. TONY LONGORIA, ONE OF THE TIPPERS, WHO WAS ARRESTED TODAY, ALLEGED TIPPER, I SHOULD SAY. THE ISSUE WITH HIM, THAT HE IN JULY OF 2009 MAY HAVE PASSED ON INFORMATION ABOUT THE TECH COMPANY AMD, SPECIFICALLY IN REGARDS TO REVENUE AND AVERAGE SALES TO A HEDGE FUND. KARUNATILAKA, ANOTHER ONE OF THE TIPPERS, AFFILIATED WITH PRIMARY GLOBAL. IN OCTOBER 2009, HE APPARENTLY IS ACCUSED OF PASSING ON INFORMATION ABOUT TAIWAN SEMICONDUCTOR SPECIFICALLY PERTAINING TO PRODUCT SALES AND SHIPPING INFORMATION TO A WALL STREET TECHNOLOGY ANALYST. AND FINALLY SHIMOON, THE LAST TIPPER, PART OF AT REST THIS MORNING THAT WE KNOW OF, STANDS ALLEGED OF HAVING PASSED ON IMPROPER INFORMATION IN OCTOBER OF 2009, SPECIFICALLY PERTAINING TO FLEXTRONICS AND APPLE, AND THE APPLE INFORMATION PERTAINED TO DETAILS ABOUT THE NEW UPCOMING iPHONE, SPECIFICALLY SALES FORECASTS. SO YOU GUYS, IT'S A FASCINATING UNFOLDING SITUATION. WE'LL BE BACK TO YOU, MELISSA, AS SOON AS WE GET MORE INFORMATION ABOUT THE DETAILS OF HOW THESE GUYS WERE INVOLVED WITH PRIMARY GLOBAL.
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KELLY: WELCOME BACK TO "THE CALL." I'M KATE KELLY WITH MORE BREAKING NEWS ON THE INSIDER TRADING INVESTIGATIONS. CNBC HAS LEARNED THAT IN ADDITION TO THE FOUR ARRESTS THAT WERE MADE EARLIER THIS MORNING IN CONNECTION WITH THE PROBE.THERE ARE ALSO FOUR GUILTY PLEAS OF FOUR OTHER INDIVIDUALS THAT HAVE ALSO TAKEN PLACE TODAY OR IN RECENT DAYS. A FEW MORE DETAILS ON THE CASE THAT WE HAVE LEARNED SINCE WE SPOKE LAST. THERE ARE AT LEAST FIVE COOPERATING WITNESSES SO FAR AS PART OF THE INVESTIGATION, DETAILS WHICH SOME REMAIN TO BE SEEN. FIRST, RICHARD CHOO-BENG LEE, HE WAS THE COOPERATING WITNESS WHOSE NAME WAS RELEASED IN AN EARLIER PHASE. TODAY, HOWEVER, WE HAVE LEARNED THAT THERE ARE AN ADDITIONAL FOUR, ONE OF WHOM WAS A SEMICONDUCTER AND TECHNOLOGY INDUSTRY EXPERT WHO HAS PLED GUILTY. ANOTHER WORKED FOR DELL AS A MANAGER IN AUSTIN, TEXAS, THIS INDIVIDUAL ALSO PLED GUILTY. ANOTHER ONE WAS A MANAGER AT PRIMARY GLOBAL, WHICH SEEMS TO BE A CENTRAL COMPANY IN THIS CASE, BASED IN MOUNTAIN VIEW, CALIFORNIA, THE EXPERT NETWORK PRIMARY GLOBAL. THIS PERSON HAS NOT YET BEEN CHARGED. AND FINALLY A COOPERATING WITNESS WHO IS A HEDGE FUND EMPLOYEE IN NEW YORK CITY WHO HAS ADMITTED TO PARTICIPATING IN THE OBTAINING OF MATERIAL NONPUBLIC INFORMATION. NO DETAILS YET ON WHETHER THIS PERSON'S BEEN CHARGED OR PLED GUILTY, BUT AGAIN WE ARE TRACKING THIS AND WE'LL COME BACK TO YOU AS SOON AS POSSIBLE.
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FRANCIS: BACK TO KATE KELLY WITH MORE BREAKING NEWS FOR US RIGHT NOW. KATE WHAT DO YOU HAVE?
KELLY: MELISSA, I JUST WANTED TO LET EVERYBODY KNOW THAT THE DEPARTMENT OF JUSTICE HAS RELEASED SOME OF THE DETAILS OF TODAY'S ACTIVITIES AND THEY HAVE IDENTIFY THE COOPERATING WITNESS WHO WORKED FOR DELL AS A GLOBAL SUPPLY MANAGER. THAT PERSON'S NAME, DANIEL DEVOR, A FORMER GLOBAL SUPPLY MANAGER FOR DELL IN AUSTIN, TEXAS. THIS PERSON WORKED AS A CONSULTANT FOR PRIMARY GLOBAL IN MOUNTAIN VIEW, CALIFORNIA, AN EXPERT NETWORK. HE PLED GUILTY DECEMBER 10th, A WEEK AGO TO WIRE FRAUD, AS WELL AS CONSPIRACY TO COMMIT SECURITIES FRAUD AND WIRE FRAUD. SO THAT'S THE LATEST. DANIEL DEVORE, FORMER DELL EMPLOYEE HAS BEEN IMPLICATED, PLED GUILTY, AND APPARENTLY IS COOPERATING WITH THE INVESTIGATION.
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