NEW YORK (CNNMoney.com) -- In the latest phase of the government's ongoing crackdown on insider trading, federal authorities said Thursday that they had made five arrests involving an "expert networking" firm and big tech companies.
"Today's charges allege that a corrupt network of insiders at some of the world's leading technology companies served as so-called 'consultants' who sold out their employers by stealing and then peddling their valuable inside information," U.S. Attorney Preet Bharara said in a statement.
Those arrested include a sales manager at Primary Global Research and three employees of technology companies that worked as consultants for the expert networking firm. They have been charged with conspiring to provide inside information to hedge funds and other investors, prosecutors said.
The arrests were the latest development in a long-term investigation into the relationship between investors and expert consulting firms amid allegations of insider trading. Such firms have become widespread on Wall Street in the last few years but remain relatively unknown outside of financial circles.
Expert networking firms connect hedge funds and mutual funds with consultants that can provide insight into companies they are interested in or already invested in. The experts -- often a customer, client or employee of the company in question -- are paid thousands of dollars in fees.
While no investors have been arrested under the probe, federal agents have been issuing subpoenas and raided the offices of three hedge funds last month.
"Our investigation is most assuredly continuing," Janice Fedarcyk, FBI assistant director-in-charge, said in a statement.
On Thursday, officials in California arrested James Fleishman, a PGR account executive. A PGR spokesman said Fleishman has been placed on leave.
Three former PGR consultants -- Walter Shimoon, Mark Longeria and Manosha Karunatakala -- were also arrested in other U.S. states on charges of securities fraud and conspiracy.
Another executive at PGR, Don Chu, was arrested last month on similar charges.
Prosecutors also disclosed that Daniel Devore, a former supply manager for personal computer maker Dell Inc., was arrested last week and has agreed to cooperate with the investigation.
Authorities said a cooperating witness indicated that Longeria leaked inside information while working as a supply chain manager at Advanced Micro Devices (AMD, Fortune 500). PGR confirmed that Longeria served as a consultant from March 2006 through March 2010, at which time the relationship was ended.
Longeria has been cooperating with investigators and will continue to do so, according to his lawyer, Samuel Bassett.
Shimoon, who was also a PGR consultant, worked for a company that supplied parts to Apple (APPL), prosecutors said. He allegedly disclosed inside information regarding Apple's iPhone smart phone.
Karunatakala is accused of leaking inside information while employed as an account manager at Taiwan Semiconductor Manufacturing Company. He was a PGR consultant from September 2007 through July 2010, at which time the relationship was ended.
Brad Baily, an attorney representing Karunatakala, said he had just received the criminal complaint and was in the process of reviewing the allegations. "We will take things one step at a time," he said.