Tuesday, 21 February 2017
Last updated 3 days ago
Jul 20 2009 | 12:45pm ET
Insider trading has landed one former hedge fund manager inside a federal prison.
Michael Tom, the founder of hedge fund Global Time Capital Management, was sentenced to a year and day in prison this week. Tom, who had originally escaped jail time before an appeals court ordered him incarcerated two years ago, was convicted in 2006 of making $750,000 trading on insider information about a pending acquisition.
Tom was charged in 2005 with hording shares of three banks after receiving a tip from a former co-worker at Citizens Financial Group. Shengnan Wang told him that the bank was conducting due diligence on a Cleveland-based bank in advance of buying it; Citizens bought one of the three banks Tom bought shares and options of, Charter One Financial, days later.
Wang and her husband pleaded guilty to insider trading charges and were sentenced to probation. Tom, too, originally got just three years’ probation, but prosecutors appealed and won; the federal First Circuit Court of Appeals ruled that probation was too lenient and that the crime required jailtime.
Earlier this year, Tom settled Securities and Exchange Commission civil charges related to the insider-trading case for more than $1 million.