CDS Insider-Trading Case Winds To Close

May 3 2010 | 10:47am ET

The Deutsche Bank bond salesman at the center of a hedge fund insider-trading case did nothing wrong, his lawyer said during closing arguments.

The Securities and Exchange Commission, in its first-ever insider-trading case involving credit-default swaps, alleges that Jon-Paul Rorech illegally tipped off former Millennium Partners portfolio manager Renato Negrin about an upcoming bond offering from Dutch media company VNU Group. Negrin, also on trial in the case, is accused of making $1.2 million on the swaps he bought in 2006 after the VNU deal was announced.

But Rorech testified that he did not know that VNU CDS were restricted when he spoke with Negrin. His lawyer, Richard Strassberg, told the jury, “everything he knew he was allowed to share with customers.”

Negrin has also denied any wrongdoing, testifying that any information received from salesmen like Rorech “is assumed to be public.”

The legal teams for both men have also argued that the SEC has no jurisdiction over CDS. The defense says the contracts are not securities.


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