Wednesday, 10 February 2016
Last updated 20 hours ago
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.