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How Two SAC Capital Traders Used Lobsters And Cheesecake Factory Gift Cards To Make Millions

Frontline's look at the pursuit of hedge fund billionaire Steve Cohen,To Catch a Trader, is premiering tomorrow. This exclusive clip shows one way his traders got their hands on proprietary information.

Posted on January 6, 2014, at 4:56 p.m. ET

The massively prestigious and award-winning documentary series Frontline is back: This time they're looking at the six-year-long probe of insider trading at hedge funds, which has netted U.S. Attorney Preet Bharara 77 convictions and zero acquittals.

Bharara has already put one hedge fund billionaire, Raj Rajaratnam, behind bars, and got SAC Capital, Steve Cohen's massively successful hedge fund, to plead guilty and pay a $1.8 billion fine for insider trading. Bharara said that employees for the firm were "engaging in insider trading that was substantial, pervasive, and in a scale without precedent in the history of hedge funds" and that SAC was a "veritable magnet of market cheaters." Six SAC Capital employees have pleaded guilty to securities fraud. Jury selection for the trial of another SAC portfolio manager accused of securities fraud, Mathew Martoma, starts tomorrow.

Cohen has not been criminally charged with securities fraud, although an investigation remains ongoing.

A clip provided exclusively to BuzzFeed plays tape of Winnie Jiau, a well-connected technology consultant, revealing proprietary information on technology companies Broadcom, Marvell, and Nvidia to SAC trader Noah Freeman. To compensate Jiau for the more than $5 million that Freeman made trading on Jiau's information, Freeman sent Jiau a $500 gift certificate to the Cheesecake Factory and live lobsters, along with $120,000 a year. Freeman pleaded guilty to securities fraud in 2011, and Jiau was convicted of conspiracy and securities fraud.

In November, Frontline released footage of Cohen in a deposition for a private lawsuit against SAC where Cohen told the attorney questioning him, "The way I understand the rules on trading inside information, it's very vague." To Catch a Trader premieres tomorrow night.

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