Chiasson, Newman Guilty Of Insider Trading

Dec 18 2012 | 12:02pm ET

Level Global Investors co-founder Anthony Chiasson and former Diamondback Capital Management portfolio manager Todd Newman were convicted on insider trading yesterday.

It took a jury two days to find against the former hedge fund managers on the fraud and conspiracy charges. The two sat expressionless as the verdicts were read; they'll be back in court in April for sentencing. Chiasson and Newman each face up to 20 years in prison.

The two men remain free on bail until their sentencing.

The guilty verdicts came after a trial which lasted just over a month, during which prosecutors said that Chiasson and Newman were members of a "criminal club" that netted more than $70 million in illegal profits. Five co-conspirators pleaded guilty, including both men's analysts, while the judge presiding over the case named a SAC Capital Advisors portfolio manager and David Ganek, Chiasson's co-founder at Level Global, as unindicted co-conspirators.

During the trial, prosecutors sought to show that the conspirators routinely traded in and on confidential corporate information about technology companies, notably Dell Inc. Unlike other insider-trading trials recently, they had no wiretaps to play for the jury, and instead relied on the testimony of the two analysts, Spyridion Adondakis and Jesse Tortora. The defense countered by calling those two men liars.

The guilty verdicts keep New York federal prosecutors a perfect 11-for-11 when an insider-trading case goes to a jury; indeed, the only one of the 72 people charged in New York in the recent crackdown who has escaped a guilty plea or verdict is a fugitive from justice.

"With today's guilty verdicts, Todd Newman and Anthony Chiasson join the ranks of high-level investment fund managers who are being made to answer for their extraordinarily bad risk-reward analysis about what is right and what is wrong," Manhattan U.S. Attorney Preet Bharara said.

Chiasson's lawyer said he would appeal the verdict; Newman's lawyer would not comment.


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

September 2014 Cover

The London Whale: Rogue risk management

The London Whale saga is a twist on the typical rogue trader story as the rogue trader recognized the error of his ways and was prepared to take his medicine but was instructed by superiors to “defe...

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.