Just five days later on May 28—the day before Marvell would make its numbers public—Barai placed yet another phone call to Jiau at 11:19 a.m. During the 20-minute conversation, Jiau was even more specific: she said Marvell would report quarterly revenues of $804 million, gross margins of 51.6%, and earnings of 11 cents per share. That day Barai bought another 100,000 shares of the company’s stock.
The next day, May 29th, Marvell reported its results and they were exactly what Jiau told Barai they would be. The stock jumped 23%. Ultimately, investigators allege, Barai made $820,000 in net earnings by trading on this information alone.
Over the course of the more than two years that Pflaum worked with Barai there would be many more trades and similar conversations with Jiau but also employees of companies in Silicon Valley who were leaking information to Barai and others, according to the government. Pflaum would later tell the FBI that he “followed Barai’s instructions” and obtained inside information at many technology companies, including Advanced Micro Devices, Fairchild, Actel, and Cypress Semiconductor.
It is not known when or why Barai first allegedly began using inside information to makes trades. Barai did not respond to several inquiries requesting comment. But according to the unsealed complaint by the government, he started as early as 2006 when he worked for Citigroup’s Tribeca Global Management as managing director.
In any case, two days after the Journal’s story appeared on the web, Barai was again communicating with his friend and colleague Pflaum. On Nov. 21st, Barai asked Pflaum to leave his laptop computer with the doorman at Pfaum’s apartment building so that he could pick it up.
Barai said, according to the government’s complaint, that he could “encrypt it and do a dept. of defense delete” so the deletions could not be restored. It was the same laptop Pflaum used to record notes of the conversation with Jiau and others.
During the text exchange, Pflaum told Barai he was at the office “taking care of stuff. Let me know if there is anything else you think I shud do.”
Responded Barai: “Just paper shred anything U see from contacts…”