The first arrest in the insider trading probe is Primary Global's Don Chu according to a complaint filed by the State Attorney's office. Per his biography, Chu "is PGR’s bridge to Asia experts and data sources. Don was a 25-year veteran in Data Communications Industry. He was with Bell Labs for more than 10+ years in data, wireless, and telecommunications arena. He has great view of technologies sector in Taiwan and China from fab, fabless through OEM/ODM players. Don intimately understands the wireless broadband communications industry, and has deep connections and relationships in the technology industry. Finally, Don is just a fun person to travel with on the highways and byways of Taiwan." Chu promises to be an even funnier bunk mate in minimum security prison, unless of course, he rats out all of his co-conspirators. Which he most likely will. Oddly enough, Chu is not in the biotech space, which is the bulk of the focus of the investigation seems to focus. We expect many more arrests imminently.

From MarketWatch:

Chu has been charged with conspiring to promote the firm's consultation services by arranging for insiders at publicly-traded companies to provide inside information to the firm's hedge fund clients for the purpose of executing profitable securities transactions, they said.

Chu is implicated in leaking insider information to ex-Galleon and SAC trader Richard Choo-Beng Lee. Here is how Lee would make money using Expert Networks:

In late 2008 and early 2009, Lee’s hedge fund was a client of the Firm. Lee’s hedge fund’s practice was to have its employees calla Firm consultant before the consultant’s company was expected to release its quarterly earnings, in part to obtain Inside Information. Lee’s hedge fund paid the Firm through soft dollars, which are payments that occur when a Firm client causes its trading activity to be directed through the Firm's designated broker-dealer, so that commissions or fees from the executed trading activity of the client satisfy the payment for the Firm's services.

One wonders what the uber-encrypted method of communication recommended by Chu was:

Later, CHU explained a method of electronic communication to Lee that CHU believed could not be detected bylaw enforcement. Referring to that particular method, CHU stated, "There’s no, no, no, no copy. If you, it’s better than personal email. . . . There’s no copy saved in the server. Even personal email, there is a copy. . . . So, [UI] just talk. Do,don’t, don’t put it down in writing. Dangerous."

Full press release from Preet Bharara, United States Attorney - Southern District of New York