Friday, 1 August 2014
Last updated 3 hours ago
Oct 24 2011 | 9:31am ET
Hedge fund manager Drew K. “Bo” Brownstein, founder and CEO of Big 5 Asset Management, pleaded guilty to securities fraud Friday, for trading on a tip passed along to him at the gym.
Brownstein was tipped off about the impending $2.7 billion acquisition of Mariner Energy by Apache Corp. by his longtime friend Drew Peterson, whose father, H. Clayton Peterson, was on the Mariner board. The Department of Justice says Brownstein made $2.5 million for his hedge fund and for relatives trading on the tip.
“I’ve severely disappointed my family, colleagues, investors and friends,” Brownstein told U.S. District Judge Robert Patterson in Manhattan federal court. “I’m truly sorry.”
Brownstein, who faces up to 46 months in prison with his plea agreement, was released on a $500,000 personal recognizance bond. He will be sentenced on December 20.
In a separate story, the U.S. Securities and Exchange Commission has added Brownstein and Big 5 Asset Management as defendants to an August complaint that H. Clayton Peterson passed confidential information about the Mariner takeover to his son Drew Peterson. The SEC says Brownstein made about $5 million from trading Mariner securities.