There was another guilty plea in the expert network insider trading cases yesterday. This time it was John Kinnucan, the founder of Broadband Research, LLC of Portland, Oregon. When the expert network cases began Mr. Kinnucan was a very vocal critic, refusing to talk with government officials in a highly publicized incident and taking to the airwaves. Subsequently he was arrested and charged. After having been held in custody for months since he could not make bail and flying across the country courtesy of the federal government, Mr. Kinnucan pleaded guilty yesterday to one count of conspiracy and two counts of securities fraud. He also agreed to forfeit $164,000. U.S. v. Kinnucan, 1:12-cr-00163 (S.D.N.Y.).

From 2008 to 2010 Mr. Kinnucan obtained material non-public information about public companies which he sold to clients of his firm, according to court papers. The information came from officials at business organizations cultivated and at times paid by Mr. Kinnucan for inside information. Those individuals were employed at companies such as F5 Networks, Inc., Sandisk Corporation and Flextronics International, Ltd. Typically the information concerned matters such as pending earnings releases.

Once he obtained the inside information Mr. Kinnucan would immediately transmit it to firm clients who typically traded. In June and July 2010, for example, he repeatedly sought information about the pending earnings release for F5. On July 2, 2010 he received a telephone call from an F5 employee. During the conversation he learned that quarterly earnings would exceed guidance by a significant amount. Shortly after the call Mr. Kinnucan telephoned clients of Broadband, two of whom traded in shares of the company. Mr. Kinnucan also purchased F5 shares. Collectively the traders made profits and avoided losses of over $1.5 million.

According to the court papers, Mr. Kinnucan lied to firm clients about the sources of information in an effort to conceal them. He also sought to obstruct the ongoing federal criminal investigation from December 2011 through February 2012, repeatedly making threatening telephone calls to prosecutors and agents responsible for the inquiry. In addition, he attempted to contact a cooperating witness to harass him. Sentencing is scheduled for January 15, 2013.

The SEC’s parallel case has been stayed pending a resolution of the criminal case. SEC v. Kinnucan, 1;12-cv-01230 (S.D.N.Y. Filed February 17, 2012).