Kinnucan v. Ainslie

July 7, 2011

By Matthew Goldstein and Svea Herbst-Bayliss

John Kinnucan, a research consultant who’s been linked to an ongoing insider trading probe, claims Maverick Capital founder Lee Ainslie has stiffed him by not paying all of the hedge fund’s bill from last year.

The Portland, Oregon-based Kinnucan tells Reuters/ Unstructured Finance that Maverick owes him $15,000 for research information he provided on technology companies in the second-half of 2010. The consultant says it was anger over Maverick’s outstanding tab that prompted him to send a brief and alarming email this week to Ainslie warning him that his $11 billion fund may “soon be charged with insider trading.”

Kinnucan, who concedes he has no inside scoop on what federal prosecutors are planning, says he was just having some fun at Ainslie’s expense because Maverick is the only one of his former customers that still owes him money. Kinnucan says Maverick won’t pay because the hedge fund contends he “caused a lot of disruption to their business.”

That’s a reference, of course, to Kinnucan’s well-publicized refusal to cooperate with the insider trading investigation. Last fall,  after refusing to implicate his clients in any wrongdoing, Kinnucan dashed off an email to all of them alerting them of the FBI’s interest. In his email this week to Ainslie, which was first reported by Business Insider, Kinnucan “cc’d” that same group of hedge fund and mutual fund traders and analysts.

An Ainslie spokesman’s response to the dust-up with Kinnucan was rather dismissive. “Kinnucan has asserted similar claims to Maverick about work he thinks he has done in Maverick’s behalf,” says Fraser Seitel. “Maverick is discussing the matter with him.”

Kinnucan contends last summer Maverick made a lot of money from a bullish research note he sent out last August on positive sales trends at semiconductor company Marvel. In the note, he provided details about some of the orders Marvel was getting from its customers and he concluded “the outlook for MRVL is not nearly so dire as the stock price and sentiment currently indicate.”

Now Kinnucan, who insists he did nothing wrong and has nothing to hide, had been keeping a low profile up until this week. Of late, he’d been letting his lawyer, Nathaniel Burney, do most of the talking.

But it seems Kinnuncan, who says he is now managing money for a few friends and relatives, is getting restless. And it appears he is itching for a fight whether it be with a rich hedge fund manager or federal authorities.

Get ready to rumble.


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