On Monday, a federal jury convicted a consultant at an expert networking firm, Winifred Jiau, of one count of conspiracy and one count of securities fraud for selling inside information she obtained through social relationships with sources from the finance departments at publicly traded companies. According to the U.S. Attorney, "Wini Jiau gave new meaning to the concept of social networking. She used and exploited friends at public companies for the purpose of obtaining, and then selling, inside information."

Specifically, between 2006 and the end of 2008, Ms. Jiau obtained data regarding detailed financial earnings and other information from a number of publicly traded companies, which she then sold to portfolio managers at hedge funds, who then traded on the information. Three hedge fund employees have previously pled guilty to similar charges, as did an insider at the finance department of one of the publicly traded companies.

Like the Rajaratnam and Goffer cases previously discussed in this blog, the Government's evidence included wiretapped telephone conversations between the participants. According to the New York Times, her counsel argued that "while the information that Ms. Jiau obtained about companies may have been nonpublic, it was not material." The jury disagreed, taking six hours to convict her. The jury foreman told reporters that she "was despairing … about what goes on in the system," adding that "I hope that hedge funds will be re-examined, because there’s a lot of corruption."

Ms. Jiau, who faces up to twenty years in prison, is scheduled to be sentenced on September 21, 2011.