A jury has convicted Anthony Chiasson and Todd Newman, two ex-hedge fund portfolio managers, of securities fraud and conspiracy charges related to the parts they played in insider trading scams that caused them to illegally profit about $72M. Newman was previously with Diamondback Capital Management, LLC while Chiasson was with Level Global Investors, LP.
According to United States Attorney for the Southern District of New York Preet Bharara, the defendants made trades using insider information about NVIDIA Corporation (NVDA) and Dell Inc. (DELL). Research analysts at different investment firms gave them the material, nonpublic information.
Chiasson was found guilty of five counts of securities fraud. On just the two technology companies’ stocks, he had made Level Global $68.5 million. Newman, who made his fund approximately $3.8 million, was convicted of four securities fraud counts. Both men could spend years behind bars.
The massive insider trading operation ran from 2007 to 2009. Level Global, a $4 billion hedge fund, underwent liquidation 2011 following a 2010 FBI raid. Diamondback told its clients in December that it too was shutting down shop following similar raids.
Meantime, the research analysts accused of giving Chiasson and Newman the information have also pled guilty to related criminal charges: Jon Horvath, previously with Sigma Capital Management; Jesse Tortora, also previously with Diamondback and who had worked under Newman; Danny Kuo, formerly with Trust Company; Sandeep Goyal, formerly with Neuberger Berman; Spyridon Adondakis, who had worked at under Chiasson at Level Global. Tortora, Goyal and Adondakis were cooperating witnesses that testified in this latest criminal trial.
Operation Perfect Hedge
The investigation and prosecution of these men are part of Operation Perfect Hedge, which is the name given to the FBI’s systematic efforts to target insider trading involving hedge funds. Since October 2009, Bharara’s office has charged 79 people with insider trading-71 of them have either been convicted or they entered guilty pleas.
Two Former Portfolio Managers Found Guilty In Manhattan Federal Court Of Insider Trading Schemes That Netted More Than $72 Million In Illegal Profits, The United States Attorney’s Office, Southern District of New York, December 17, 2012
Hedge Fund Managers Convicted of Insider-Trading Scheme, Bloomberg, December 18, 2012
More Blog Posts:
$78M Insider Trading Scam: “Operation Perfect Hedge” Leads to Criminal Charges for Seven Financial Industry Professionals, Stockbroker Fraud Blog, January 18, 2012
Texas Securities Fraud: SEC Charges Life Partners Holdings Inc. in Life Settlement Scam, Stockbroker Fraud Blog, January 4, 2012
Insider Trading: Former FrontPoint Partners Hedge Fund Manager Pleads Guilty to Criminal Charges, Institutional Investor Securities Blog, August 20, 2011
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