Thursday, 24 July 2014
Last updated 1 hour ago
May 22 2012 | 11:13am ET
A former hedge fund manager and a former Yahoo! executive have admitted to swapping insider tips and illegally trading on them.
Reema Shah, who managed several mutual funds in addition to a hedge fund at Ameriprise Financial's RiverSource Investments unit, and Robert Kwok, who had been senior director of business management at Yahoo!, pleaded guilty to conspiracy. The two also agreed to settle with the Securities and Exchange Commission.
Shah also pleaded guilty to one count of securities fraud.
According to federal prosecutors in Manhattan, Kwok passed advanced word of Yahoo!'s quarterly earnings and possible deals with other companies to Shah, who in turn told Kwok about potential business transactions involving other publicly-traded companies.
"Kwok and Shah played a game of you scratch my back and I'll scratch yours," SEC lawyer Scott Friestad said. "When corporate executives and mutual fund professionals misuse their access to confidential information, they undermine the integrity of our markets and violate the trust placed in them by investors."
Shah will be sentenced on May 24 and Kwok on Sept. 18. The former faces up to 25 years in prison and the latter five. Financial penalties will be determined later by the court, the SEC said, adding that the two are already barred from serving as officers or directors of public companies.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…