Level Global Founder, Co-Defendants Hit With New Charges

Aug 29 2012 | 1:10pm ET

Three hedge funders arrested in the expert-network insider-trading crackdown saw the indictments against them lengthen yesterday.

Prosecutors added charges related to alleged improper trading in Nvidia Corp. shares against Anthony Chiasson, Jon Horvath and Todd Newman. The three men were originally charged only with insider-trading in Dell Corp. shares; all three pleaded not guilty to the initial charges in February.

More charges could still be on the way: Prosecutors have said that a large number of stocks could be at issue in the trial, currently set to begin on Oct. 29.

The new allegations bring to more than $60 million the illicit profits the three men are alleged to have earned.

Chiasson is a co-founder of Level Global Investors and Newman a former portfolio manager at Diamondback Capital Management. Those firms were two of the four hedge funds raided by the Federal Bureau of Investigation in November 2010; of the four, only Diamondback remains in business. Horvath is a technology analyst at SAC Capital Advisors' Sigma Capital Management unit.

The indictment accuses Chiasson of improperly short-selling 1 million Nvidia shares, Newman of improperly shorting 375,000 shares and Horvath of an improper swaps bet equivalent to shorting 160,000 shares. The allegedly nefarious transactions took place in April and May of 2009.

The three men are currently free on bail and face up to 25 years in prison if convicted. A fourth man arrested with them, Danny Kuo, pleaded guilty in April and is cooperating with prosecutors.

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