Almost two years ago, Level Global Investors LP and Diamondback Capital Management LLC were among four hedge funds raided by the Federal Bureau of Investigation as part of a nationwide crackdown on insider trading.
Bloomberg reports that this week, the first two defendants from those firms are set to face trial in Manhattan federal court, as the U.S. continues its unprecedented five-year-old investigation of market corruption at hedge funds, technology companies and consulting firms.
Level Global co-founder Anthony Chiasson and Todd Newman, a former portfolio manager for Stamford, Connecticut-based Diamondback, are accused of making more than $67m in illicit profits by trading on inside information in Dell Inc. (DELL) and Nvidia Corp. (NVDA) U.S. District Judge Richard Sullivan will preside over the trial of both men, who have pleaded not guilty.
The case is the latest chapter in a series of probes that last month yielded a two-year prison sentence for their highest profile target, former Goldman Sachs Group Inc. (GS) Director Rajat Gupta. Gupta, convicted of insider trading, conspired with Galleon Group LLC co-founder Raj Rajaratnam. Rajaratnam, who is serving an 11-year term, has asked an appeals court to throw out his conviction, arguing wiretaps used in his case were illegal.
Prosecutors in the office of Manhattan U.S. Attorney Preet Bharara have said Chiasson and Newman were part of a group of fund managers, analysts and technology company employees who traded stock tips in a conspiracy that operated from 2007 to 2009.
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