Feds Sue Former Yahoo! Honcho

     MANHATTAN (CN) – Federal prosecutors and the SEC on Monday accused a former top executive at Yahoo! with tipping a mutual fund manager to inside information about a search engine partnership between Yahoo! and Microsoft, from which the mutual fund made $389,000.
     Federal prosecutors filed a 2-count information accusing Reema Shah of conspiracy to commit securities fraud and securities fraud, and a one-count information accusing Robert Kwok of conspiracy to commit securities fraud.
     The SEC accused Shah, a former portfolio manager at RiverSource Investments, and Kwok, Yahoo’s former senior director of business management, of inside trading.
     Kwok, 36, of Danville, Calif., tipped Shah, 39, of Menlo Park, Calif., in July 2009 that the long-rumored partnership would be announced soon, the SEC said in its 8-page complaint.
     Based on that information, Shah had several funds buy 700,000 shares of Yahoo!, then sold them 2 weeks later for a profit of $389,000, the SEC says in its complaint.
     It claims that Shah tipped Kwok to inside information about an acquisition in April 2008, from which Kwok made $4,754 trading on his own account.
     The SEC seeks disgorgement and penalties and wants Shah and Kwok told in no uncertain terms not to do it again.
     Federal prosecutors want $4,754 from Kwok and “at least a sum of money” from Shah equal to what he or others made from inside trading.

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