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

Q&A: Jeff Eaton Talks Capital Raising, CalPERS And The Secondaries Market

Oct 14 2014 | 10:16am ET

Global placement agent Eaton Partners has raised close to $60 billion for some of...

Lifestyle

MacDonald-Korth Offers Insights Into Paintings Bought, Sold By Hedgies

Oct 7 2014 | 9:00am ET

Definitive and complete ratings require an in-person examination of an artwork,...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.