Ex-Millennium Fund Manager Cleared In Swaps Case

Jun 28 2010 | 7:16am ET

The Securities and Exchange Commission’s first insider-trading case involving credit default swaps ended with a whimper on Friday when a judge ruled that a former hedge fund manager and a bond salesman did nothing wrong.

U.S. District Judge John Koeltl, who heard the bench trial without a jury, said there was no evidence that Renato Negrin, formerly of Millennium Partners, and Deutsche Bank’s Jon-Paul Rorech violated insider-trading laws. The judge ruled that the information that Rorech provided Negrin about an upcoming bond offering from Dutch media company VNU was not a confidential tip, but  public information.

“While the SEC attributes nefarious content to those calls through circumstantial evidence, there is, in fact, no evidence to support this inference,” the judge wrote. “The SEC has also failed to present any evidence that Mr. Rorech had any motive to provide ‘inside information’ to Mr. Negrin.”

The SEC had alleged that Negrin made $1.2 million on CDS he bought on VNU bonds after the bond sale was announced.

“As I stated from the outset, I did nothing wrong and I never traded on inside information,” Negrin said in a statement issued by his lawyer. “Today, I’m finally vindicated.”

Koeltl did rule that the SEC has jurisdiction over CDS. Negrin and Rorech had disputed the regulator’s power to bring the case at all.


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