Level Global Co-Founder, SAC Manager Co-Conspirators, Judge Says

Dec 7 2012 | 12:17pm ET

The judge presiding over the trial of Level Global Investors co-founder Anthony Chiasson has ruled that Level Global's other founder, David Ganek, and a SAC Capital Advisors portfolio manager are co-conspirators in the insider-trading case.

U.S. District Judge Richard Sullivan's ruling yesterday means that prosecutors can present evidence involving Ganek and SAC's Michael Steinberg, neither of whom have been charged with a crime, at the trial, which also features former Diamondback Capital Management portfolio manager Todd Newman. The judge rejected the arguments of Chiasson's and Newman's lawyers that the government had not shown that Ganek and Steinberg, who is on leave from SAC, were involved. Chiasson's lawyer, Gregory Morvillo, said that "the government's conclusions with regard to those events are firmly undercut by the totality of other evidence in the record, including their own witness' testimony."

But Sullivan, citing e-mail evidence, said, "Ganek is expressing awareness of [cooperating witness and former Level Global analyst Spyridion] Adondakis' Dell contact. Statements made by Ganek and his conversations during this time do suggest that he understands Adondakis is not just any analyst crunching numbers."

As for Steinberg, the judge said, "These e-mails which are in relation to Steinberg do indicate to me that there is an inference, more likely than not, that he understands the source of the information that he's getting and he's trading on it."

Sullivan's ruling came in spite of testimony from Adondakis this week and last, in which Adondakis, under cross-examination, said he did not "discuss" or "disclose the source" of his information with Ganek.

"Did you implicate Mr. Chiasson in insider trading?" Chiasson lawyer Reid Weingarten asked.

"Yes," Adondakis said.

"And what about Mr. Ganek?"

"I don't know about Mr. Ganek," Adondakis said.

Still, prosecutors argued that there "are a lot of circumstantial facts showing Mr. Ganek was provided with actual numbers and had sufficient circumstantial evidence to show that he knew those numbers, that you can't ordinarily get, that the numbers would have had to come from an inside source," Assistant U.S. Attorney Antonia Apps said.

Neither Steinberg nor SAC would comment. But Ganek's lawyer said, "more relevant" than his client's co-conspirator status "is the testimony from the government's star witness that David Ganek was not told about inside information, and the fact that after a two-year investigation my client has not been charged by anyone with doing anything wrong."

Level Global shut its doors shortly after its offices were raided by the Federal Bureau of Investigation in November 2010. Diamondback announced its closure this week.

Chiasson's and Newman's trial is set to resume on Monday.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…