11-4167(L)

United States v. Jiau

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term 2012

(Argued: April 10, 2013 Decided: October 23, 2013)

Docket Nos. 11-4167(Lead), 12-2222(Con)

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UNITED STATES OF AMERICA,

Appellee,

-- v. --

WINIFRED JIAU, aka WINI, aka SEALED DEFENDANT 1,

Defendant-Appellant,

DONALD LONGUEUIL, SON NGOC NGUYEN, aka SONNY,

Defendants.

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B e f o r e : KEARSE, WALKER, and CHIN, Circuit Judges.

Winifred Jiau appeals her conviction for conspiracy and 

insider trading in the District Court for the Southern District of 

New York (Rakoff, J.), asserting that evidence at trial was 

admitted in error and insufficient to support her conviction. We 

agree with the district court that telephone conversations with a 

co-conspirator, which were recorded in the ordinary course of 

business, were admissible, and that evidence of non-pecuniary

benefits conferred upon the tippers was sufficient to prove that 

the tippers had personally benefited from the insider trading 

conspiracy. CONVICTION AFFIRMED.

RANDA D. MAHER, Law Office of Randa 

Maher, Great Neck, New York, and 

Winifred Jiau, pro se, Dublin, 

California, for Appellant.
2

DAVID I. MILLER (Jenna M. Dabbs and 

Diane Gujarati, Assistant United 

States Attorneys, on the brief), for

Preet Bharara, United States

Attorney for the Southern District 

of New York, New York, NY, for

Appellee.

JOHN M. WALKER, JR., Circuit Judge:

Defendant-Appellant Winifred Jiau was convicted, following a 

jury trial in the District Court for the Southern District of New 

York (Jed Rakoff, Judge), of conspiracy to commit securities fraud 

and wire fraud, in violation of 18 U.S.C. § 371, and insider 

trading, in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. 

§ 240.10b-5 and 18 U.S.C. § 2. This opinion addresses Jiau’s 

claims on appeal that (1) the district court erred in admitting

evidence that she claims was recorded in violation of Title III of 

the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. 

§§ 2510-22 (“Title III”), and (2) the evidence against her was 

insufficient. We reject these arguments and affirm the conviction.

1

I. BACKGROUND

From September 2006 to December 2008, Jiau operated an insider 

trading scheme that involved a pair of tippers who worked at 

publicly-traded companies, Son Ngoc Nguyen of NVIDIA Corporation

and Stanley Ng of Marvell Technology Group, Ltd., and a pair of 

tippees who were hedge fund managers, Samir Barai of Tribeca 

 

1 Jiau’s other arguments on appeal, including those challenging 

certain orders that we vacate, are addressed in a summary order filed

simultaneously with this opinion.
3

Capital Management and later Barai Capital Management (“BCM”) and 

Noah Freeman of Sonar Capital Management and later SAC Capital. 

Jiau worked as a contract employee at NVIDIA and as a consultant 

who provided information about the semiconductor industry to 

financial analysts. At each of those jobs, she was aware of the 

rules against disclosing material non-public information. 

Jiau’s scheme was to obtain from her tippers earnings data of 

their employer companies and convey this data to her tippees before 

those companies’ quarterly financial results were publicly released. 

The tippees compared the data with Wall Street analysts’ published 

expectations and unpublished rumors known as the “whisper.” If the 

data indicated that earnings would fail to meet expectations, the 

tippees would “go short” by selling their stock positions in the 

companies before the financial reports were made public. If the 

data showed that earnings would likely exceed Wall Street’s 

expectations, the tippees would “go long” by buying the stock.

To provide an incentive, Jiau promised the tippers insider 

information for their own private trading. She also engaged in her 

own insider trading. After a three-week trial, a jury convicted 

Jiau of conspiracy to engage in insider trading and one substantive 

count of insider trading. On September 21, 2011, the district 

court sentenced her to 48 months’ imprisonment and ordered a 

forfeiture of $3.118 million. This appeal followed.
4

II. Discussion

A. Motion to Suppress

Before trial, Jiau moved to suppress recordings of certain 

telephone conversations with the tippees that Barai had his 

subordinates record or transcribe as contemporaneous instant 

message notes. She asserted that the recordings and transcriptions

were inadmissible under Title III, 18 U.S.C. §§ 2510-22. After 

holding a suppression hearing, the district court denied the 

motion, ruling that the recordings and transcriptions were not 

barred by Title III. United States v. Jiau, 794 F. Supp. 2d 484 

(S.D.N.Y. 2011).

We review a district court’s ruling on a motion to suppress 

for clear error as to the facts and de novo on questions of law,

United States v. Rodriguez, 356 F.3d 254, 257 (2d Cir. 2004), and 

pay special deference to the district court’s factual 

determinations going to witness credibility, Bennett v. United 

States, 663 F.3d 71, 85 (2d Cir. 2011).

Title III generally prohibits the interception or wiretapping 

of electronic communications not authorized by a court of law or 

permitted by one of the statute’s exceptions. 18 U.S.C. § 2511. 

Among the exceptions permitting interceptions is one for a

recording that is made “in the ordinary course of . . . business.” 
5

18 U.S.C. § 2510(5)(a)(i).2 A separate statutory exception permits 

a party to the communication, who is not acting under the color of 

law, to make the recording himself or consent to the recording. 18 

U.S.C. § 2511(2)(d). This latter exception does not apply, 

however, “if the communication is intercepted for the purpose of 

committing any criminal or tortious act in violation of the 

Constitution or laws of the United States or any State.” Id. 

Recordings in violation of Title III are inadmissible as evidence. 

18 U.S.C. § 2515; United States v. Horton, 601 F.2d 319, 324 (7th 

Cir. 1979); Fleming v. United States, 547 F.2d 872, 874 (5th Cir. 

1977). The question presented here is whether, when a call is made 

in furtherance of an insider trading conspiracy but is recorded in 

the ordinary course of business, the recording is inadmissible 

under Title III.

It is undisputed that Barai had a hearing impairment, and 

consented to his subordinates listening in on, recording, or 

transcribing his telephone conversations for his and their benefit.

3 

 

2 The term “intercept” is defined under Title III as the 

“acquisition of the contents of any wire, electronic, or oral 

communication through the use of any electronic, mechanical, or other 

device.” 18 U.S.C. § 2510(4). A carve-out in the definition of 

“electronic, mechanical, or other device” exempts recordings made in 

the ordinary course of business from Title III’s prohibition. 18 

U.S.C. § 2510(5) (defining “electronic, mechanical, or other device” 

as “any device or apparatus” capable of intercepting wire 

communications other than “any telephone or telegraph instrument, 

equipment or facility, or any component thereof” used by a subscriber 

of such service in the “ordinary course of [the subscriber’s] 

business”).

3 Jiau, in her pro se reply brief, alleges that the government had 
6

The recordings and transcriptions were therefore made in the 

ordinary course of business and therefore admissible under 

§ 2510(5)(a)(i). See Arias v. Mut. Cent. Alarm Serv., Inc., 202 

F.3d 553, 559 (2d Cir. 2000) (finding ordinary course exception 

applicable where “[l]egitimate business reasons support the . . . 

recording of [such] calls”); see also 18 U.S.C. § 2510(5)(b)

(permitting recordings made through “a hearing aid or similar 

device being used to correct subnormal hearing to not better than 

normal”). The recordings were also made with the consent of Barai, 

a party to the communication, and therefore admissible under 

§ 2511(2)(d).

Jiau argues that the interceptions were made in furtherance of 

illegal insider trading and inadmissible because Barai would not 

have been able to understand the insider information without the 

recordings. This argument conflates the purpose of the 

communications with the purpose of the recordings. It is the 

 

learned from a proffer by Barai on March 17, 2011 that Kurt Haatch, 

his assistant, made the recordings on his own accord, that the 

recordings were not made in the ordinary course of business, and that 

Jason Pflaum, who later discovered Haatch’s recordings, had not made 

any recordings himself. This information, she contends, constitutes 

exculpatory material that was not disclosed by the government until 

her sentencing. She argues further that since Freeman was also on the 

calls, Barai did not need another person to listen in on, record, or 

transcribe the calls. Jiau’s principal brief on appeal does not raise 

these arguments, nor does the government address them. After 

reviewing the record, we find no clear error in the district court’s 

finding that Haatch had recorded two calls so Barai could have “all 

the details” and that Barai asked Pflaum to listen in on other calls. 

Jiau, 794 F. Supp. 2d at 487. In any event, there is no evidence to 

suggest the recordings and transcriptions were made with the intent to 

harm Jiau.
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latter that controls. Notwithstanding that some of Barai’s 

recorded calls were made to carry out illegal insider trading, in 

deciding whether a violation of Title III occurred, we look to why 

the calls were recorded and not why the calls were made. The 

carve-out within § 2511(2)(d), which renders inadmissible consented 

recordings made for the purpose of perpetrating “criminal” or 

“tortious” acts, is to be construed narrowly. It is confined to 

instances where the recording party intends to use the recording to 

harm or injure a recorded party, such as to blackmail, threaten, or 

publicly embarrass the recorded party. See In re DoubleClick Inc. 

Privacy Litig., 154 F. Supp. 2d 497, 514-15 (S.D.N.Y. 2001)

(summarizing the legislative intent and history of § 2511(2)(d) and 

related case law). Hence, a Title III violation exists “if, at the 

time of the recording, the [recording party] plans to use the 

recording to harm the other party to the conversation.” Caro v. 

Weintraub, 618 F.3d 94, 100 (2d Cir. 2010). On the other hand, 

“[i]f, at the moment he hits ‘record,’ the offender does not intend 

to use the recording for criminal or tortious purposes [against the 

other party], there is no violation.” Id. In summary, the fact 

that an illegal enterprise was discussed in the recorded 

conversation is not determinative of a violation under 

§ 2511(2)(d), United States v. McTiernan, 695 F.3d 882, 890 (9th 

Cir. 2012), because we look to the “intended use of the recordings” 
8

to determine the purpose of the recording. In re High Fructose 

Corn Syrup Antitrust Litig., 216 F.3d 621, 626 (7th Cir. 2000).

When Barai’s subordinates made the recordings and 

transcriptions, there was no indication that they intended to use 

the interceptions to harm Jiau, unlike in United States v. Vest, 

where a Title III violation was found because the recording was 

made to blackmail the recorded official to ensure his performance 

of his agreed role in a bribery scheme. 639 F. Supp. 899, 905-08

(D. Mass. 1986). Hence, the recordings and transcriptions at issue 

are also not inadmissable under § 2511(2)(d).

B. Sufficiency of Evidence

Jiau contends that the evidence at trial was insufficient to 

prove that (a) her tippers personally benefited from their 

disclosure of insider information; (b) Barai’s firm acted on her 

information to carry out trades of Marvell stock on May 23 and 27-

29, 2008; and (c) the information she supplied to her tippees met

the materiality requirement of the securities laws.

We review the sufficiency of the evidence de novo and ask 

“whether, after viewing the evidence in the light most favorable to 

the prosecution, any rational trier of fact could have found the 

essential elements of the crime beyond a reasonable doubt.” United 

States v. Espaillet, 380 F.3d 713, 718 (2d Cir. 2004) (quotation 

marks omitted). “[A] judgment of acquittal” is warranted “only if 

the evidence that the defendant committed the crime alleged is 
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nonexistent or so meager that no reasonable jury could find guilt 

beyond a reasonable doubt.” Id. (quotation marks omitted). Ample 

evidence supported each of the contested factual findings.

To hold Jiau criminally liable for insider trading, the 

government had to prove each of the following elements beyond a 

reasonable doubt: (1) the insider-tippers (Nguyen and Ng) were 

entrusted the duty to protect confidential information, which (2) 

they breached by disclosing to their tippee (Jiau), who (3) knew of 

their duty and (4) still used the information to trade a security 

or further tip the information for her benefit, and finally (5) the 

insider-tippers benefited in some way from their disclosure. See

Dirks v. SEC, 463 U.S. 646, 659-64 (1983); SEC v. Obus, 693 F.3d 

276, 289 (2d Cir. 2012).

1. Tippers’ breach of duty and benefit

Jiau argues that the evidence was insufficient to establish 

that her two insider-tippers, Nguyen and Ng, benefited personally 

from the disclosures they made to her. Instead, she asserts, the 

trial evidence showed only that Nguyen gave her NVIDIA’s earnings 

data “out of sheer desperation” to stop her relentless pestering of 

him for information and Ng shared similar data from Marvell because 

he was lonely and valued her friendship. Appellant Reply Br. 7. 

These arguments are unavailing.

“Personal benefit” is “broadly defined . . . [to] include[] 

not only ‘pecuniary gain,’” Obus, 693 F.3d at 285 (quoting Dirks, 
10

463 U.S. at 663), but also, inter alia, any “reputational benefit

that will translate into future earnings,” Dirks, 463 U.S. at 663, 

and “the benefit one would obtain from simply ‘mak[ing] a gift of 

confidential information to a trading relative or friend.’” Obus, 

693 F.3d at 285 (quoting Dirks, 463 U.S. at 664). The existence of 

“a relationship between the insider and the recipient that suggests 

a quid pro quo from the latter, or an intention to benefit the 

[latter]” may be sufficient to justify an inference of personal 

benefit. Id. at 664.

The benefits to Nguyen from tipping were manifold. Jiau 

treated him to meals at restaurants and gave him gifts including an

iPhone, live lobsters, a gift card, and a jar of honey. She also 

provided Nguyen with insider information about other stocks and the 

two formed an investment club.

The evidence of personal benefit to Ng, while less abundant, 

is no less dispositive on this issue. Nguyen testified that Jiau 

asked him to recruit others into their investment club and he 

invited Ng, because Ng liked to trade stocks and had access to 

inside information at Marvell. The fact that Ng did not receive 

any tips from Jiau’s investment club in return for the tips he gave 

is of no moment. In joining the investment club, Ng entered into a 

relationship of quid quo pro with Jiau, and thus had the 

opportunity to access information that could yield future pecuniary 

gain. The proof required to show personal benefit to the tipper is 
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modest and is satisfied with respect to both Nguyen and Ng. See

Obus, 693 F.3d at 292 (“In light of the broad definition of 

personal benefit set forth in Dirks, this [evidentiary] bar is not 

a high one.”).

2. Jiau’s information as the basis for BCM’s 

trades in Marvell stock in late May 2008

Jiau denies that BCM used insider information from her to 

trade Marvell shares in late May 2008, contending that (a) BCM was 

also getting insider information from another tipper, Tai Nguyen;

(b) too little time had elapsed between the time of her phone call 

with Barai, who was not in the office on May 23, and the first of 

BCM’s orders for Marvell stock; (c) there was no evidence of any 

directives from Barai to his staff to make the trades; and (d) BCM 

analysts reacted with disbelief to the information she provided and 

therefore could not have acted on it. Her arguments ignore and 

misinterpret the record evidence, including Jason Pflaum’s 

confirmation that the Marvell orders were placed right after the 

May 23 phone call, Barai’s expression of gratitude to Jiau on May 

29, and Tai Nguyen’s lack of information about Marvell (he supplied 

information about NVIDIA). The surprise that the BCM analysts 

expressed in reaction to her information could reasonably have been 

understood by the jury as astonishment at the gap between Wall 

Street’s expectations and the data she reported, which they 

nevertheless exploited to build a large position in Marvell. When

viewed in the light most favorable to the government, the evidence 
12

at trial was easily sufficient for the jury to find that the 

essential elements of the insider trading offense had been 

established.

3. Materiality of Jiau’s information

Finally, Jiau asserts the government should have called an 

expert to explain whether the insider information she provided was 

actually material to a reasonable investor. While the decision of 

whether to admit or exclude expert testimony is left to the sound 

discretion of the district court, Gen. Elec. Co. v. Joiner, 522 

U.S. 136, 142-43 (1997), expert testimony that seeks to address 

“lay matters which [the] jury is capable of understanding and 

deciding without the expert’s help” is not relevant and is 

therefore inadmissible, Andrews v. Metro N. Commuter R.R. Co., 882 

F.2d 705, 708 (2d Cir. 1989). 

In this case, no expert testimony was necessary to help the 

jury interpret the materiality of the insider information Jiau

provided to her tippees. The surprise professed by BCM analysts in 

reaction to her information regarding Marvell and the trades they 

made to exploit that information could have conclusively 

demonstrated materiality. Basic Inc. v. Levinson, 485 U.S. 224, 

231-32 (1988) (defining materiality as whether a reasonable 

investor would have viewed the undisclosed information as having 

“significantly altered the total mix of information made available”

(quotation marks omitted)). The jurors did not need an expert to 
13

tell them that the information Jiau revealed made a noticeable

difference in the investors’ thinking that was manifested in the 

reaction of the BCM analysts and their subsequent trading.

III. CONCLUSION

For the foregoing reasons, and for those set forth in the 

accompanying summary order, the judgment of conviction and 

sentence, apart from the order of forfeiture, are AFFIRMED. As 

discussed in the accompanying summary order, the order of 

forfeiture and the order denying Jiau’s 2012 pro se Rule 33 motion 

are VACATED and the case is REMANDED for further proceedings.