Friday, 30 January 2015
Last updated 10 hours ago
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.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…