Freeman, On Stand, Admits To Insider Trading At SAC

Jun 6 2011 | 10:00am ET

Testimony in the Winifred Jiau insider-trading trial opened with a bang, as former SAC Capital Advisors portfolio manager Noah Freeman admitted to regularly trading on confidential information at the hedge fund giant and another hedge fund, with much of that information coming from Jiau.

Freeman, who has pleaded guilty in the case and is cooperating with prosecutors, said he engaged in insider-trading at SAC, where he worked from 2008 through 2010, "a number of times." But he honed the practice at Sonar Capital Management, the Boston-based hedge fund where he worked for three years before joining SAC, he testified on Friday.

Insider-trading "was a regularly-employed part of our business model" at Sonar, Freeman said, adding that he personally made between $20 million and $30 million for the hedge fund trading on confidential tips. About $10 million of those ill-gotten gains came on tips from Jiau, who Freeman met while working at Sonar.

Freeman testified that he met Jiau, a consultant for Primary Global Research, eight times between 2006 and 2008 and spoke "regularly" with her by phone, conversations he described as "extremely helpful."

"She provided us with the complete financials" of two technology companies, Freeman told the jury, which saw a member excused and replaced with an alternate before Freeman's testimony began. "We caused her to be paid."

A lawyer for Sonar founder Neil Druker denied Freeman's allegations, calling "any statement that Sonar Capital used insider trading as a business model" "categorically false" and referring to Freeman as a "rogue" former employee who "violated Sonar's strict and robust policies against trading on the basis of insider information."

Freeman said during his time on the stand that he had implicated "more than a dozen" people during his cooperation with prosecutors, which began when he was approached by the Federal Bureau of Investigation late last year. His testimony will resume on Monday.

Freeman is the first of three cooperating witnesses prosecutors plan to call. Jiau's lawyer, Joanna Hendon, has said she'll call one of her own, Barai Capital Management's Samir Barai, who has implicated her client.


In Depth

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

Compelling Opportunities In The Alternatives Space

Jul 29 2014 | 9:33am ET

In an environment where many asset classes seem expensive by historical standards...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    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…

Publisher's Note