Hedge Fund Manager Barai Avoids Prison Term For Insider Trading

Mar 2 2016 | 12:10am ET

Former hedge fund manager Samir Barai has been spared a prison term for his role in an insider-trading scheme due largely to his role as a cooperating witness in several other cases.

U.S. District Court judge Deborah Batts sentenced Barai, who was the founder of Barai Capital Management, to two years of supervised released and ordered him to forfeit more than $216,000. 

Barai and former SAC Capital portfolio managers Noah Freeman and Donald Longueuil were part of a multi-year scheme to gather non-public information about technology companies such as Nvidia and Marvell Technology from expert network companies, which often relied on employees of such firms to act as consultants. 

Barai admitted to trading on the information, pleading guilty in 2011 on securities fraud and other charges, and became a cooperating witness in a wide-ranging investigation that resulted in the convictions of Freeman and Longueuil, among others. 

According to court documents, Barai has already forfeited the $3.91 million made from the illegal trading. Civil penalties, which would typically have accompanied the forfeiture, were not imposed due to Barai’s cooperation in the related cases. 

Barai was one of dozens of individuals charged in the insider-trading crackdown that started in November 2010. The cases against many of those caught up in the long-running investigation have since been overturned, abandoned or put into legal limbo following the now-infamous December 2014 Newman ruling which substantially raised the bar for insider trading convictions. 

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