UBS Hedge Fund Tipster Gets Six Years In Clink

Nov 4 2008 | 1:32am ET

A former UBS executive has been sentenced to six-and-a-half-years in prison for running an insider-trading scheme involving several hedge funds.

Michael Guttenberg pleaded guilty earlier this year to conspiracy and securities fraud. Prosecutors alleged, and the judge ruled, that he started the scheme “to give inside information to others to use illegally.” Authorities have called the scam one of the biggest insider-trading cases on Wall Street since the 1980s.

In 2001, Guttenberg, who worked in UBS’ equity research department and had just been named to its investment review committee, offered a friend insider tips in exchange for his forgetting about a $25,000 debt. The friend took the deal, and made millions for himself and a pair of hedge funds he ran, over the next six years. Guttenberg later made similar arrangements with others, including another hedge fund manager.

Guttenberg and a dozen others were arrested in March 2007. Among those collared were hedge fund managers David Tavdy and Erik Franklin, whose Jasper Capital and Chelsea Capital earned $10 million and $7.5 million in ill-gotten gains from the tips.

Both Tavdy and Franklin have pleaded guilty and await sentencing.

Guttenberg’s lawyers had pushed for a reduced sentence, arguing that he was a “broker man” and that “the punishment in real life terms… has been severe.” U.S. District Judge Deborah Batts also ordered him to forfeit $15.8 million.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.