Thursday, 24 July 2014
Last updated 49 min ago
Jan 8 2010 | 3:37am ET
A former SAC Capital Advisors analyst has been identified as the recipient of a tip in an insider-trading case—a tip that may have earned the hedge fund giant more than $3 million.
The unidentified “tippee 1” in a Securities and Exchange Commission complaint against a suspended Blackstone Group banker is Jonathan Hollander, according to media reports. Hollander worked for nearly four years as a junior analyst at SAC’s CR Intrinsic Investors division before leaving the firm in December 2008.
Hollander was first identified as the recipient of an insider tip by Reuters. He was referred to as a friend of the ex-Blackstone banker, Ramesh Chakrapani, in court papers.
At least three other SAC alumni have been linked to the Galleon Group insider-trading case, and some have been charged. Neither Hollander nor SAC have been accused of any wrongdoing in the Blackstone case, but the case offers the first allegation by authorities of insider-trading at the Stamford, Conn., firm, which manages some $13 billion.
According to federal prosecutors, Hollander, an unindicted co-conspirator in a since-dismissed criminal case against Chakrapani, said he earned $3.5 million for CR Intrinsic. He also allegedly used the tip about the January 2006 buyout of supermarket chain Albertsons to make $91,000 for himself and his parents.
Prosecutors had the criminal charges against Chakrapani dismissed in April, just three months after his arrest, and the SEC is seeking to have its case dismissed, as well. Both the U.S. Attorney’s office and regulator could re-file charges against Chakrapani, who Blackstone said it would reinstate if “we can satisfy ourselves that that U.S. Attorney will not reinstate its proceedings against Mr. Chakrapani.”
“After reviewing the initial complaint in this matter, SAC thoroughly investigated this former employee’s trading in Albertsons and, on its own initiative, presented the findings to government authorities in February 2009,” SAC spokesman Jonathan Gasthalter said. “We have cooperated fully with the government’s investigation and will continue to do so.”
The same, it appears, cannot be said for Hollander, who now runs his own consulting firm, Chesapeake Advisory Group. At a recent court hearing, SEC lawyers said it is their understanding that Hollander is not cooperating.
The linking of another former employee to another insider-trading case is another headache for SAC, which last month was hit, alongside founder Steven Cohen, with a $300 million lawsuit filed by Cohen’s ex-wife. Patricia Cohen accused her ex-husband of trading on nonpublic information about General Electric’s takeover of RCA in 1985, before he founded his hedge fund.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…