Another sharp compliance reminder on insider trading from the Justice Department and the Securities and Exchange Commission: It's not only illegal for employees to sell confidential information about their companies to traders, it's also equally illegal to buy it and trade on it.

The U.S. Attorney for the Southern District of New York, the New York Office of the Federal Bureau of Investigation and the SEC unveiled new charges in an insider-trading scheme they say netted more than $30 million, this time against a hedge fund and four portfolio managers and analysts accused of trading on the confidential information they got from technology company employees moonlighting as expert network consultants.

The U.S. Attorney and FBI charged Samir Barai, a former portfolio manager at two hedge funds, and Donald Longueuil, formerly a research analyst at a third hedge fund and a portfolio manager at a fourth, with conspiracy to commit securities and wire fraud. Barai was also charged with securities fraud. Jason Pflaum, a former research analyst for Barai, and Noah Freeman, a research analyst at a fifth fund and then a portfolio manager at a sixth, pled guilty to one count each of conspiracy to commit securities fraud and securities fraud. Barai and Longueuil have also been charged with obstruction of justice for efforts to destroy evidence of their involvement in insider trading after reading media reports about the FBI's insider trading investigation.

Meanwhile, the SEC charged all four men with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Barai, Pflaum, Freeman, and Longueuil are also charged with aiding and abetting others' violations of Section 10(b) and Rule 10b-5. Barai, Pflaum, and Barai Capital are charged with violations of Section 17(a) of the Securities Act of 1933. The Commission's complaint seeks a final judgment permanently enjoining them from future violations of the federal securities laws, ordering disgorgement of the ill-gotten gains plus prejudgment interest and financial penalties.

The charges against the traders come on the heels of SEC charges filed last week against six technology company employees who allegedly pocketed hundreds of thousands of dollars in sham consulting fees for illegally tipping hedge funds and other investors with material non-public information about their companies. The six insiders were expert network consultants to the firm Primary Global Research LLC.

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