FBI Seized SAC Folder in Expert-Networking Investigation

Feb 26 2015 | 2:31pm ET

FBI agents seized a "manilla folder" labeled “S/A/C correspondence” with a redacted name during a 2010 insider-trading investigation of Level Global Investors.

Documents unsealed by a U.S. judge reveal an intensive investigation by the Federal government involving expert-networking firms and non-public information.

The newly released evidence stems from the Federal investigation of former Level Global manager Anthony Chiasson and former Diamondback Capital Management manager Todd Newman, according to Bloomberg. Both managers' insider-trading convictions were overturned in December.

The FBI wiretapped phones at Level Global for more than six months, and caught an analyst receiving nonpublic information from expert consultants, according to the report. 

The reserval of the two convictions has placed several pending cases in doubt, including a guilty plea from former Wyoming Retirement System CIO John Johnson. 

Others cases citing the reversal Newman's overturned conviction include former Whittier Trust analyst Danny Kuo and former SAC Capital manager Michael Steinberg.

U.S. prosecutors have convicted eight former managers and analysts of SAC Capital after a seven-year probe of the firm and its founder, Steven Cohen. 

Three weeks ago, former portfolio manager Noah Freeman avoided prison time after providing a wealth of evidence against other participants in insider-trading schemes.

According to an FBI memo, Freeman, who once managed a $300 million portfolio, said it was “understood” that providing one’s best trading ideas to SAC Capital founder Steven Cohen meant “providing Cohen with inside information.”

Though Cohen hasn't faced charges, the SEC has filed a suit against him, accusing the hedge fund boss of failing to properly supervise his employees. The case has faced several delays, and it is uncertain when it might finally go to court.

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