Diamondback Settles SEC Claims

Jan 23 2012 | 2:06pm ET

In the wake of new insider-trading charges against two former employees, hedge fund Diamondback Capital Management has taken another step towards putting the damaging scandal behind it.

The Stamford, Conn.-based hedge fund—the only one of the four hedge funds raided in November 2010 to remain standing—agreed to pay more than $9 million to settle with the Securities and Exchange Commission. The firm will pay a $3 million fine and surrender $6 million in profits earned on trades made by former portfolio manager Todd Newman, who was arrested last week. Former analyst Jesse Tortora pleaded guilty in the case and is cooperating with prosecutors.

"We believe that the proposed settlement appropriately sanctions the misconduct while giving due credit to Diamondback for its substantial assistance in the government's investigation and the pending actions against former employees and their co-defendants," SEC New York chief George Canellos said.

In addition to cutting a deal with the SEC, Diamondback won a non-prosecution agreement from federal prosecutors.

"We are gratified finally to have reached closure on the government proceedings, and deeply regret the difficulties caused to our investors during the last 14 months," Diamondback wrote to investors.

Diamondback's assets under management have fallen by more than half as investors bolted the firm following the Federal Bureau of Investigation raid.


In Depth

Dillon Eustace: The Advantages of ICAVs

Feb 11 2016 | 7:51pm ET

As the growth of alternative investment vehicles continues, global asset managers...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedging Against Reputational Risk in the 21st Century

Feb 12 2016 | 7:18pm ET

For investors, the first step in researching a new fund or manager is to google...