Accused Hedge Fund Insider-Traders Face Trial

Nov 13 2012 | 11:28am ET

Level Global Investors co-founder Anthony Chiasson and former Diamondback Capital Management trader Todd Newman will begin their battle against the odds—and insider-trading charges—today.

Opening statements will be heard in the case against the two men today in Manhattan federal court. Prosecutors have accused the two of being members of a "criminal club" that traded in confidential tips about technology companies and made $60 million doing so. Six others were charged in the case; all pleaded guilty, including two who struck deals with prosecutors ahead of the trial, and several are expected to testify against their alleged fellow "club" members.

Chiasson and Newman's legal teams have kept quiet about their legal strategy, although prosecutors have attempted to stop them from using some wiretaps that the government say contain false "exculpatory statements."

In its recent crackdown on insider-trading, the U.S. Attorney's Office in Manhattan has won seven jury verdicts—and has yet to lose a single case that went to trial. Among those to go down after a trial are Galleon Group founder Raj Rajaratnam, former McKinsey & Co. chief Rajat Gupta and two people linked to so-called "expert networks."

The trial formally opened last week, with jury selection. Seven women and five men, among them a bartender, a retired postal worker, a nurse and an unemployed dog-walker, will judge the two former hedge fund executives.

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