Washington: The US government vowed to continue its five-year investigation into insider trading on Wall Street as it charged a fourth ring of hedge-fund traders with using illegal information to make millions of dollars.
Seven analysts and portfolio managers were accused of securities fraud in the latest sweep, the Justice Department said on Wednesday. The charges included the first current employee of Steven Cohen's $14 billion (Dh51.41 billion) SAC Capital Advisors LP to be caught up in the probe, and the highest-profile manager to be arrested since Raj Rajaratnam was indicted in October 2009.
"Each wave of charges and arrests seems to produce leads that lead us to the next phase," Janice Fedarcyk, assistant director at the Federal Bureau of Investigation, said yesterday at a news conference in New York. "This initiative is far from over."
Anthony Chiasson, 38, who co-founded Level Global Investors LP with David Ganek in 2003, was among those taken into custody. He helped build New York-based Level Global into a $4 billion firm before shutting it down last February because of the probe. Chiasson and others at the fund made $57 million on illegal trades on Dell Inc. and the alleged scheme netted $61.8 million altogether, according to complaint. That's almost as much as Rajaratnam, who ran Galleon Group LLC and is now serving 11 years in prison for insider trading after being found guilty in May.
The government also arrested Jon Horvath, a technology analyst at SAC Capital's Sigma Capital Management unit. Horvath, 42, allegedly traded on inside information provided by an employee of Dell while working at SAC, according to the complaint.
While at least four other investment professionals, including Chiasson, charged in the probe, are former SAC analysts or portfolio managers, Horvath was the first to be working at SAC when he was arrested.
Wednesday's charges involved a circle of friends "who essentially formed a criminal club whose purpose was profit and whose members regularly bartered lucrative inside information," said US Attorney Preet Bharara. "It was a club where everyone scratched everyone else's back."
The group of friends all worked and lived in San Francisco in 2006, according to a civil complaint filed by the Securities and Exchange Commission and public records.
Freeman's Testimony
Noah Freeman, a former analyst at Stamford, Connecticut-based SAC, testified in June at a criminal trial in a related case that he had traded on inside information a half-dozen times while at the hedge fund. Freeman, who was fired from SAC in January 2010, pleaded guilty in February to insider trading.
Jonathan Gasthalter, a spokesman for SAC Capital, said the hedge fund is continuing to cooperate with the government's investigation. He declined to comment further.
