Articles Posted in Hedge Fund Insider Trading

Hedge Fund SAC Capital Advisers has agreed to pay a record $1.8 billion to resolve insider trading investigations by the Department of Justice and Founder Cohen Steven A. Cohen will go uncharged uncharged. The U.S. Department of Justice said that payout is the largest insider trading settlement in history.

An indictment in July alleged systemic insider trading took place at SAC Capital involving the stocks of more than 20 publicly-traded companies from 1999 through 2010. Eight employees have pleaded guilty or been convicted at trial. SAC Capital agreed in November to plead guilty to four counts of securities fraud and one count of wire fraud.

The Stamford, Connecticut-based firm renamed itself Point72 Asset Management and is becoming a family office that will primarily manage Cohen’s personal fortune, recently estimated by Forbes magazine at $11.1 billion.

A new report released by a New York law firm specializing in securities actions says that more than one third of hedge fund professionals admit they have broken the rules to get ahead. The firm, Lebaton Sucharow commissioned the anonymous online survey of 127 hedge fund professionals in order to gauge the level of wrongdoing inside hedge funds and the likelihood that hedge fund employees would report illegal activity to authorities.  In the survey 28% said that if leaders of their firm learned that top earners had engaged in insider trading, the leaders would be unlikely to report the misconduct. More than half of the respondents, 54% reported that the SEC was ineffective in detecting, investigating and prosecuting securities violations. A section of the Dodd Frank financial reform law, passed in 2010 was intended to make it easier for people in the securities industry to report wrongdoing. Whistleblowers are entitled to up to 30% of the monetary sanctions and can report the information entirely anonymously without revealing their names, just through their counsel. Jeffrey Newman represents financial whistleblowers. If you know of financial wrongdoing, call him directly at 1-800-682-7157 for a free consultation.

Level Global Investors, a Greenwich Connecticut based hedge fund has been fined $21.5 million and the fund has agreed to pay the fine to settle charges that its co-founder and analyst at the firm engaged in repeated insider trading in the securities of Dell Inc. and Nvidia Corp. The insider trading charges were filed against Level Global’s co-counder Anthony Chiasson in January 2012. Jeffrey Newman represents whistleblowers.

JAT Capital, started by John Thaler with $1 billion, was subpoenad for documents by the FBI regarding use of expert networks. The firm has not been accused of wrongdoing. Thaler covered tech, media and telecomm sectors which is where the FBI has focused its investigation.

A former Galleon Group fund manager says that Raj Rajaratnam knew days before his arrest that Cisco System had a major acquisition in the works with the $2.9 billion purchase of telecommunications giant Starent Networks. Rajaratnam, Galleon’s founder was arrested as part of the largest U.S. hedge fund insider case in history. Prosecutors revealed that Rajaratnam told former McKinsey & Co consultant Anil Kumar, now a cooperating government witness, that he learned Cisco would soon be buying Starent. It is unclear at this time where the tip came from.

Yesterday’s arrest and charges of insider trading by hedge fund employees and managers including Harvard Business School grad Sam Barai and Harvard College grad Noah Freeman, are just the beginning and more arrests are expected shortly based on a statement by Janice Fedarcyk, who heads the New York office of the FBI, that more rrets are coming. Barai, Freeman, Donald Longeuuil and others were charged with insider trading and conspiracy. U.S. Attorney Preet Bharara said that insider trading on Wall Street is rampant. The charges against the traders made yesterday stem from earlier arrests and the cooperation of eight employees or consultants of Primary Global LLC, a Mountain View California based firm that conects investors with employees of public companies who work as consultants. Sam Barai who headed Barai Capital received private information from Primary Global’s Anthony Longoria and Winifred Jiau both of whom were previously charged. “We’re far from finished,” Bharara said yesterday.

Another hedge fund, Barai Capital Management and its Manager Harvard Business School alum Sam Barai,has been tied to the government’s major insider trading investigation. Reports suggest he may have received inside information on Marvell technology and Nvidia from Winifred Jiau, who was charged in December with conspiracy and securities fruad for leaking confidential information about technology companies and two money managers at different hedge funds. Under the Dodd Frank Act whistleblower provisions, revealing such activity as insider trading can result in rewards of upto 30% of the fines rendered against a company. The whistleblower provisions of the law were designed to give incentives to those people with information about insider trading.