Outspoken analyst John Kinnucan pleads guilty to insider trading

In announcing the guilty plea, U.S. Attorney Preet Bharara said, “Briefly a cause célèbre as some called him, Mr. Kinnucan is now a felon facing sentencing for his insider trading crimes.”

The guilty plea comes nearly two years after Kinnucan gained public notice as a critic of the crackdown, taking to the pages of the New York Times and national television to condemn the effort.

Kinnucan formerly ran the “expert consulting” firm Broadband Research in Portland, Oregon, providing clients like hedge funds and money managers with research about publicly traded technology companies.

In agreements with clients, Broadband said it would not pass on non-public information and would not rely on employees of public companies as sources, according to the indictment in the case.

But prosecutors say the research Kinnucan passed to clients included non-public information, in violation of securities laws. Kinnucan was accused of obtaining this information by plying sources at technology firms F5 Networks, SanDisk and Flextronics with cash payments and other incentives.

The Flextronics insider also passed Kinnucan tips about Apple, with which Flextronics worked, according to the complaint.

In late 2010, Kinnucan took the unusual step of announcing on TV and in an e-mail to clients that he had been contacted by FBI agents, whom he mocked as “fresh-faced, eager beavers.” He said the agents asked him to wear a wire in an insider-trading investigation targeting hedge funds.

In an op-ed published later that year in the New York Times, Kinnucan accused the Justice Department of trying to “retroactively criminalize what has been common practice for years.”

“Research providers are constantly struggling with the question of what constitutes appropriate information for our clients,” Kinnucan wrote. “Most of the picture here is gray, with a thin margin of black and white on either side.”