David Slaine, a former manager for Chelsey Capital, has pleaded guilty to using UBS insider tips that allowed him to earn over $3 million for the hedge fund while he made more than $500,000 in illegal profits. The inside information was given to him by an ex-UBS Securities LLC executive.
According to the US Securities and Exchange Commission’s complaint, Slaine must still settle the SEC’s securities fraud allegations against him. The agency claims that Erik Franklin, a Chelsey Capital colleague, gave Slaine the tips. Franklin had received them from Mitchel S. Guttenberg, who worked in UBS’s equity research department as an executive editor.
The tips, which were UBS analysts’ equity securities recommendations, were supposed to be nonpublic. Slaine, however, used the information to trade in advance of the recommendations. In 2002, he made over 20 trades using that information.
SEC has settled related allegations against Guttenberg, Franklin, and five others. Guttenberg, who was convicted of insider trading, is serving 78 months in prison.
Slaine could be sentenced to up to 25 years behind bars. Although he pleaded guilty in December, this information was only made public this month. The former hedge fund manager has also been identified as a government cooperator in the Galleon hedge fund insider trading scheme.
Related Web Resources:
Ex-NY fund manager Slaine pleads guilty, Reuters, February 2, 2010
Ex-Galleon Trader Slaine Pleaded Guilty, Sued by SEC in Probe, BusinessWeek, February 3, 2010
Investor charged in Galleon insider trading case, TimesOnline, February 2, 2010
If you were the victim of an insider trading scheme, our securities fraud law firm can determine whether you have grounds for getting your money back. Contact Shepherd Smith Edwards & Kantas LTD LLP today.