Alleged Chiasson Co-Conspirator Pleads Guilty

Apr 16 2012 | 12:46pm ET

The accused hedge fund insider-traders arrested in January will face an even tougher fight for their freedom following the guilty plea of one of their alleged co-conspirators.

Danny Kuo, a former technology fund manager at Whittier Trust Co., pleaded guilty on Friday to securities fraud and conspiracy. He has agreed to cooperate with prosecutors in their case against three former hedge fund employees, including the founder of Level Global Investors, Anthony Chiasson.

According to prosecutors, Kuo, Chiasson, former Diamondback Capital Management portfolio manager Todd Newman and former SAC Capital Advisors analyst Jon Horvath traded tips as part of an insider-trading ring that netted more than $60 million in illegal profits. Chiasson, Newman and Horvath have all pleaded not guilty; Kuo is the fourth in the current case to plead guilty and agree to cooperate.

The charges stem from the government's ongoing probe into expert-network Primary Global Research. In November 2010, the Federal Bureau of Investigation raided the offices of four hedge funds, including Level Global and Diamondback. Three of those four hedge funds have since closed; only Diamondback is still standing. All told, 18 people have been charged in the Primary Global case, with 13 pleading guilty and two being convicted by juries.

"During the time I did these things, I knew what I was doing was wrong," Kuo told the court. He admitted to paying a friend for tips about Nvidia Corp. and to illegally trading on some of the insider information he peddled.

Kuo faces up to 45 years in prison, although he'll likely receive much less on account of his cooperation. He has agreed to forfeit his ill-gotten gains and will be sentenced on Oct. 15.

Separately, prosecutors said they could increase the number of stocks at issue in the case against Chiasson, Newman and Horvath from two to as many as 35. Their trial is set to begin on Oct. 29.


In Depth

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

Five Tips For Successfully Marketing Your Hedge Fund

Jan 30 2015 | 9:14am ET

When it comes to the hedge fund industry, the notion of “build it and it will...

 

Editor's Note