Tuesday, 29 July 2014
Last updated 2 hours ago
Mar 28 2013 | 11:14am ET
The hedge fund analyst arrested on insider-trading charges on Tuesday works at Artis Capital Management.
Matthew Teeple was charged with conspiracy and securities fraud this week. Prosecutors, who did not identify Teeple's employer, said that he learned about Foundry Networks' impending acquisition by Brocade Communications Systems from a friend, former Founder chief information officer David Riley. Teeple both pushed his colleagues at Artis to trade on the tip and passed it to two others, John Johnson, a former money manager at a Denver firm who is now chief investment officer for Wyoming's state retirement system, and Karl Motey.
The latter move may prove Teeple's undoing. Motey, an expert-network consultant, has also been a major cooperating witness for the government for four years. The allegedly illicit Foundry-Brocade trades occurred in 2008; Motey was approached by the Federal Bureau of Investigation in April 2009.
Motey, who recently received a no-jail sentence for his cooperation, kept notes about the information he allegedly received from Teeple. In one entry, he wrote that Brocade might put Foundry for $2.9 billion, just shy of the $3 billion it eventually paid. Later, he wrote that Teeple had "initially heard" the deal was "going through."
The following year, after Motey began cooperating, he recorded a phone call with Teeple in which Teeple said, "I'm actually meeting with, with my, my best guy from Foundry at 10 o'clock." Prosecutors say the "best guy" was Riley.
Motey was a key witness in the expert-network insider-trading crackdown and has testified in two trials, both resulting in convictions.
Teeple has been suspended by San Francisco-based Artis, where he has worked since 2007. Teeple's lawyers have said he plans to fight the charges, in spite of the cooperation of both Motey and Johnson, who pleaded guilty earlier this month, with prosecutors.
"Artis has been cooperating fully with the government's investigation into this mattter and has been advised by the U.S. Attorney's Office that the firm is a witness in the investigation," the firm said in a statement.
Riley, whose lawyer has not commented, initially told the FBI in September that no one had asked him about the Brocade deal prior to its announcement, but later said he might have confirmed it to Teeple, and that Teeple might have thanked him after the announcement. Riley denied giving any details about the terms of the acquisition to Teeple.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…