Ex-Diamondback Trader's Cooperation Lauded As Sentencing Looms

Jul 26 2012 | 1:26pm ET

In the federal government's probe of insider-trading, one hedge fund wire-wearer appears to have begotten another.

Federal prosecutors yesterday lauded the "substantial assistance" offered by former Diamondback Capital Management portfolio manager Anthony Scolaro, who is to be sentenced on conspiracy and securities fraud charges next week. According the U.S. Attorney's Office in Manhattan, Scolaro recorded at least 43 phone calls while cooperating with the Federal Bureau of Investigation, helping develop "leads and other valuable information."

"Scolaro's timely cooperation with the government was substantial," prosecutors Reed Brodsky and Antonia Apps wrote. "Scolaro's cooperation provided the government with valuable information about the hedge fund industry and the use of matchmaking firms. Scolaro's cooperation led directly to several investigations."

Scolaro's cooperation was apparently the result of another wire-wearer's: Franz Tudor, a former Galleon Group trader. Tudor was sentenced to three years' probation last month after prosecutors credited him with turning Scolaro.

Scolaro, who provided the first link between the Galleon case and the expert-network case that led to the FBI raid on Diamondback and three other hedge funds, pleaded guilty in November 2010 to trading on confidential information he received from Tudor. He faces up to 20 years in prison when he is sentenced on July 30.

According to Brodsky and Apps, Scolaro met with the FBI some 75 times over the year-and-a-half before his case was unsealed in May 2011. "Since being approached by the FBI, Scolaro never complained or hesitated in providing assistance to the government."


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

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.