A technology research analyst who gained notoriety for taunting the federal government over its pursuit of insider trading is expected to plead guilty in United States District Court in Manhattan on Wednesday, according to people briefed on the matter.
John Kinnucan, founder of Broadband Research, based in Portland, Ore., is expected to plead guilty to sharing secret information about technology companies with money managers in exchange for cash.
People briefed on the matter spoke on the condition of anonymity ahead of the formal entering of the plea.
The government's case against Mr. Kinnucan included wiretaps, phone records, instant messages and cooperating witnesses.
Mr. Kinnucan relied on a wide web of sources, including senior employees at SanDisk and Flextronics as well as insiders at the technology firm F5 Networks, who freely shared insider information with him in exchange for cash and gifts, according to prosecutors. Those gifts included in vestments in start-ups, sharing a beach house and lavish meals, prosecutors said.
After obtaining the tips, Mr. Kinnucan shared that information with hedge fund clients in Texas and California, the government's complaint states. He charged his clients $30,000 a quarter, prosecutors said.
At one time, Mr. Kinnucan's clients included the large hedge funds Citadel in Chicago and SAC Capital Advisors in Stamford, Conn. Mr. Kinnucan emerged as one of the government's most vociferous critics during its wide-ranging crackdown on insider trading. He refused to cooperate with the authorities, disparaging the federal agents who came to his home in late 2010 as “fresh-faced eager beavers†in a letter to clients warning of the government's investigation.
In its multiyear case, the government has ensnared a number of analysts and hedge fund managers. It won big victories against Raj Rajaratnam, the billionaire founder of the Galleon Group hedge fund, and Rajat K. Gu pta, a former board member of Goldman Sachs. It has also involved low-level employees including Bonnie Hoxie, a secretary at Disney who tried to sell inside information about the company.
But the case against Mr. Kinnucan was among the most peculiar. His letter to clients about the investigation went viral, showing up in news accounts and on blogs across the country.
He began to grant dozens of interviews, where he continued to attack the government's efforts. In commentaries, he styled himself as an individual willing to stand up against the government's persecution of what he said were perfectly legal tactics.
But as the months wore on, his communications began to grow increasingly outlandish. He began to threaten the federal agents in charge of the case. He taunted them with racial epithets and expletives. He left a voice mail for one United States attorney stating: “Too bad Hitler's not here. He'd know what to do with you,†according to a government motion to deny bail in the case.
In February, agents arrested him at his Portland home and charged him with insider trading.
While facing charges, Mr. Kinnucan retained and dismissed several lawyers. His current lawyer could not be immediately reached for comment.
