Wireless exec gets prison after BlackBerry leak that hurt stock price

By Nate Raymond
Sept 15 (Reuters) - A former wireless retail executive was
sentenced to five months in prison Tuesday for selling
confidential industry information to an analyst whose subsequent
2013 report on sales of BlackBerry Ltd BB.TO 's newest
smartphone sent the company's stock price downward.
James Dunham, 60, was also ordered by U.S. District Judge
Douglas Woodlock in Boston to serve five months of home
confinement after his prison term and to pay $76,000 in light of
his June guilty plea to a wire fraud charge.
The sentence was confirmed by the office of U.S. Attorney
Carmen Ortiz in Boston and came in the first case spilling out
of its investigations into the black market for secret corporate
information that exists outside of insider trading.
Dunham, a resident of Glastonbury, Connecticut, was the
former chief operating officer of Wireless Zone, which operates
more than 400 franchise Verizon Wireless outlets.
According to prosecutors and court papers, Dunham entered a
secret consulting relationship with an analyst at Boston-based
financial firm Detwiler Fenton in 2010 to provide wireless
industry information in exchange for $2,000 per month.
Prosecutors said the information gave the analyst "real
time" insight into what happened at the franchiser's stores and
was used for research reports sent to investors.
The scheme came to light in April 2013 after Dunham provided
information about a company's newly released smartphone,
prosecutors said.
While not identified in court papers, the manufacturer
matches the description of BlackBerry, whose launch of the Z10
smartphone was considered critical to the troubled company.
Prosecutors said after Dunham told the analyst, Jeff
Johnston, that returns of the phone exceeded sales at some of
the franchiser's stores, Detwiler Fenton issued a report based
on that information.
BlackBerry's stock price subsequently fell 7 percent. The
company quickly disputed Detwiler Fenton's report as "false and
misleading," and urged U.S. and Canadian regulators to
investigate.
Prosecutors said the information was accurate so far as the
franchiser's stores went, though may not have been with respect
to overall sales and returns.
Dunham, whose lawyer did not respond to requests for
comment, was arrested in February.
Johnston was never charged and remains employed at Detwiler
Fenton, which did not respond to requests for comment.
Ortiz's office has continued to investigate similar conduct
since Dunham's arrest.
In July, Brian Bennett, an employee at proxy advisor
Institutional Shareholder Services Inc, pleaded guilty to
divulging confidential corporate voting details to a proxy
solicitation firm. ID:nL1N0ZP2O0
The case is U.S. v. Dunham, U.S. District Court, District of
Massachusetts, No. 15-cr-10110.