Tuesday, 3 March 2015
Last updated 3 min ago
Oct 3 2013 | 3:22am ET
Citigroup has agreed to pay $30 million to settle allegations that an analyst gave three hedge funds, including SAC Capital Advisors, a sneak peak at a research report.
Kevin Chang, a former Citigroup Global Markets analyst in Taiwan, gave four clients—Citadel Investment Group, GLG Partners, SAC and T. Rowe Price—an unpublished research report at the end of last year predicting lower sales for Apple's iPhone, according to the settlement with Massachusetts regulators. Chang's report was based on information from Hon Hai Precision Industry, an iPhone manufacturer, and was not provided to other customers until three days later—by which time Apple shares had dropped more than 5%.
The settlement was first reported by the Boston Globe.
Three of the four clients who received the early research traded in Apple shares during those three days, Massachusetts Secretary of the Commonwealth William Galvin said. It is unclear whether any of them profited from the moves, but said he may bring charges against them, as well. "We haven't gotten their yet," he said.
According to the settlement, filed last night, Citi clients pressed Chang for insights he might have from Hon Hai. "Hey Kevin, Are you picking up any order cuts to iPhone?" one SAC employee wrote to Chang in an e-mail.
Chang was fired by Citi last month.
The Massachusetts case against Citi is unrelated to the federal insider-trading charges against SAC. The firm has denied any wrongdoing.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…