Remember, about a year ago, when hedge fund Level Global was rumored to have a government mole in its ranks? At the time, the firm’s representatives said such reports were total bull shit, and, investors were told, here’s how they knew that to be the case:

“As is the case each time there is a new development in the U.S. Attorney’s investigation, we have conducted an extensive internal factual correlation analysis, cross-referencing the facts in the complaints to our firm’s records. Our experienced outside legal counsel has also conducted its own analysis. Based on all of our work and analysis, we have concluded that these complaints do not appear to be referencing Level or Level personnel.”

Frankly, LG was getting a little tired of having to constantly run factual correlation analysis in order to prove the world wrong but c’est la vie. Anyway, despite usually having a 99.9% accuracy rate, the factual correlation calculator apparently missed one.

Last month, federal prosecutors in Manhattan said in a court filing in the case of a PGR employee that Level Global had made a $1.7 million profit by covering a short position it had in Taiwan Semiconductor Manufacturing Co. Ltd. in June 2009. That May and June, a Level Global technology analyst had about seven phone calls with Manosha Karunatilaka, a PGR expert who worked at TSMC and has pleaded guilty to supplying inside information to investment fund clients, prosecutors said. The Level Global technology analyst, Spyridon “Sam” Adondakis, was overseen by Mr. Chiasson and is cooperating with the government’s investigation, the Journal has previously reported, citing people familiar with the situation.

And now this is happening:

The Federal Bureau of Investigation in Boston arrested Todd Newman, a former portfolio manager with hedge-fund firm Diamondback Capital Management who oversaw technology investments, according to a law enforcement official. The FBI separately arrested Jon Horvath, an employee of Sigma Capital Management, an affiliate of giant hedge fund SAC Capital Advisors, in Manhattan, an official said. Anthony Chiasson, a co-founder of former hedge-fund group Level Global Investors LP, surrendered in New York, and a fourth person was being sought.

FBI Arrests Three In Insider Probe [WSJ]
Related: Level Global Says No Snitches Work At This Fund

136 comments (hidden for your protection)
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Comments (136)

  1. Posted by Gill Grunt | January 18, 2012 at 9:47 AM

    Spyridon had to go by "Sam" because "Spyro" was already taken.

  2. Posted by thomas malthus | January 18, 2012 at 9:49 AM

    All of this, but TOTAL SILENCE on corzine…what fucking scumbags! When is the next plane to….to…..

  3. Posted by guest | January 18, 2012 at 9:50 AM

    umm…what?

  4. Posted by worried guest | January 18, 2012 at 9:50 AM

    are you having some personal problems?

  5. Posted by Kegels123 | January 18, 2012 at 10:03 AM

    Shall we shag now or shag later?

    -Hedge Fund Mystery Man

  6. Posted by An Apologist | January 18, 2012 at 10:03 AM

    Hedge fund traders don't cheat. Extensive internal factual correlations analyses cheat.

  7. Posted by VonSloneker | January 18, 2012 at 10:05 AM

    Opa Spyridon!!! When we Greeks set out to make a mess, we do it right…

    - G. Papandreou

  8. Posted by The Biz Speak Guy | January 18, 2012 at 10:11 AM

    So, are they saying that they sub-optimized their defined internal processes in an over-arching risk management paradigm shift that resulted on co-locational buckets of aligned risk buttresses which, when they "drilled down" through the extensive internal factual correlation analysis suggested a synergy skew more toward bifurcated opinions of legality in the investment space?

  9. Posted by Mexi_Cant | January 18, 2012 at 10:12 AM

    Homies be goin to the pennnnnnnetentary.

  10. Posted by Guest | January 18, 2012 at 10:23 AM

    What year did they graduate from Harvard?

  11. Posted by Lynn Tilton | January 18, 2012 at 10:25 AM

    A full insider probe by FBI agents is a fanatsy of mine.

  12. Posted by AIG Quant via LEH | January 18, 2012 at 10:28 AM

    Spyro the dragon?

  13. Posted by Guest | January 18, 2012 at 10:30 AM

    Never mind – I looked them up on the alumni directory instead.

    Chiasson, Mr. Daniel GSA 2001

    I'm so proud.

  14. Posted by mourning becomes | January 18, 2012 at 10:30 AM

    will lulu meet tony in the shower and doubt him while reading gatsby?

  15. Posted by Inquisitive Soul | January 18, 2012 at 10:31 AM

    Any insider info on who will win the Giants 49ers game this weekend? Gut tells me Giants. But then again gut also told me MF Global was a great place to work. So my gut is usually not right. I also thought that Agassi would defeat Sampras in '95 US Open. UGH.. dead wrong on that one.

  16. Posted by Alt_EST | January 18, 2012 at 10:31 AM

    Nouns ∧ Verbs = Heinous Business Speak

  17. Posted by Guest | January 18, 2012 at 10:32 AM

    Did you go to Harvard?? Your faux-coy bragging is impressing the shit out of me.

  18. Posted by Guest | January 18, 2012 at 10:38 AM

    If Steve Young is healthy then the Giants do not stand a chance.

    -Tip Van Winkle

  19. Posted by VonSloneker | January 18, 2012 at 10:42 AM

    …the call is coming from inside the house

    -Sgt. Sacker

  20. Posted by Guest | January 18, 2012 at 10:47 AM

    At least he didn't say "hard stop." I hate it when people say that.

  21. Posted by Walter | January 18, 2012 at 10:51 AM

    Has the whole world gone crazy? Am I the only one around here who gives a shit about the rules? Mark it zero!

  22. Posted by Guest | January 18, 2012 at 10:52 AM

    With Dave Meggett and LT, I don't think the Giants have much to worry about.

    - guy who still plays Techmo Super Bowl sometimes

  23. Posted by Guest | January 18, 2012 at 10:53 AM

    Why?

  24. Posted by L. Winthorpe | January 18, 2012 at 10:58 AM

    Oh sure, like *he* went to Harvard…….

  25. Posted by Quant in Oklahoma | January 18, 2012 at 11:00 AM

    What do the UWS protesters have to do with Matt and Bess?

  26. Posted by Guest | January 18, 2012 at 11:01 AM

    I believe you're missing the point. The point is that whenever you hear about some scumbag insider trading ring, at least one perpetrator probably went to Harvard. But if you choose to read it differently that's OK with me – create your own reality, everybody else does.

  27. Posted by PermaGuestII | January 18, 2012 at 11:05 AM

    Fuck yeah!

    -Yale

  28. Posted by SDCERA Quant | January 18, 2012 at 11:06 AM

    Hey guys: The San Francisco Giants play BASEBALL….not football.

  29. Posted by J. Skilling | January 18, 2012 at 11:08 AM

    Fuckin' A!

  30. Posted by The Truth | January 18, 2012 at 11:13 AM

    going to jail for $340K in carry is the NKI

  31. Posted by guest | January 18, 2012 at 11:17 AM

    Kill yourself immediately. Do no pass go, do not collect $200.

  32. Posted by serious question | January 18, 2012 at 11:18 AM

    What's it like being the poster child for retroactive abortions?

  33. Posted by guest | January 18, 2012 at 11:19 AM

    How long did it take you to come up with that painful attempt at humor? 2-3 days?

  34. Posted by P. Allen | January 18, 2012 at 11:22 AM

    Well it's hard to fit insider trading into one's schedule, what with all the cocaine use and closeted homosexuality.

  35. Posted by J. Paulson | January 18, 2012 at 11:24 AM

    While going to jail seems a bit rough I'd settle for $340 in carry right about now.

  36. Posted by Captain Vito | January 18, 2012 at 11:29 AM

    It's a mediterranean thing.

  37. Posted by Abovethelaw | January 18, 2012 at 11:29 AM

    Your getting in the weeds there..

  38. Posted by Butner | January 18, 2012 at 11:30 AM

    any relation to that hot bitch Chiessi ?

    maybe you can share a cell…

  39. Posted by Lynn Tilton | January 18, 2012 at 11:35 AM

    Me to.

  40. Posted by HR Question | January 18, 2012 at 11:40 AM

    So what you are saying is I shouldn't hire the following candidates:

    Moletta Johnson
    Ratibulous Pefferfink
    Snitchelsby Grossman

  41. Posted by mexican | January 18, 2012 at 11:46 AM

    you mean ese's bato

  42. Posted by trojan_ | January 18, 2012 at 11:46 AM

    yeah… i'm going to need that TPS report…

  43. Posted by Guest Emeritus | January 18, 2012 at 11:48 AM

    Don't forget "C. Anary Singer".

  44. Posted by dalio | January 18, 2012 at 11:50 AM

    Speak truth to power, brother

    -r. dalio

  45. Posted by PermaGuestII | January 18, 2012 at 11:58 AM

    He's attempting to give a greater degree of granularity to his analysis of the situation.

  46. Posted by Sgt Joe Friday | January 18, 2012 at 12:00 PM

    Note to 4th person being sought. Delete your Facebook profile, stop tweeting pictures of your trophy wife, exchange the Maserati for a simple S-Class, pull your kid out of the Ethical Culture Fieldston School, rent out the Hampton's House, don't show up for the MOMA board meeting this week, and for God's sake cancel your table at Per Se! You have to go deep underground man! Maybe the Four Seasons in Nevis – they will never find you there.

  47. Posted by early_hominid | January 18, 2012 at 12:07 PM

    It is, but it's not just a Greek thing.

    – (soon to be former) Capt. Schettino

  48. Posted by Just Hablarin' | January 18, 2012 at 12:13 PM

    You mean "vato".

  49. Posted by dude who knows sam | January 18, 2012 at 12:27 PM

    Sam is actually a really good dude. I know Matt won't agree, but I think historically the line between right and wrong to get "edge" was very difficult to see. I am glad I wasn't in the shoes of a PM under tremendous pressure to deliver Alpha.

  50. Posted by FKApmco | January 18, 2012 at 12:31 PM

    At the end of the day Perma we need to determine whether what is happening represents a cyclical or secular shift because if it's secular then it's a pretty powerful statement that a tipping point has been reached and what were formerly episodic events have become the new new and will lead to a reduction in the hedge fund industry's wallet share which can only mean that their ability to generate greater long-term sustainable returns has been irreparably harmed.

    -gal who's been listening to way too many earnings calls lately.

  51. Posted by Guest | January 18, 2012 at 12:45 PM

    Speaking of tennis, am I the only one that would like to see Federer bitch slap (literally) that rat bastard Nadal at the Aussie Open?

  52. Posted by Guest | January 18, 2012 at 12:46 PM

    If he's driving a Maserati he's a douche bag and I hope he is arrested pronto.

  53. Posted by VonSloneker | January 18, 2012 at 12:54 PM

    Closeted?

    -Buddy "Alphonse" Fletcher

  54. Posted by Unsilent Majority | January 18, 2012 at 1:15 PM

    Gentlemen, Do you concur?

  55. Posted by PermaGuestII | January 18, 2012 at 1:41 PM

    But isn't this the new normal across the spectrum in the current risk on/risk off environment?

  56. Posted by Guest | January 18, 2012 at 1:56 PM

    Examine your motives picking the two sex offenders.

  57. Posted by FKApmco | January 18, 2012 at 1:59 PM

    Perhaps. My take on this is that the only salient point is that the macro uncertainty that has dominated the securities market in the recent past still remains unresolved, primarily because of the overhand of the Euro Zone crisis.

  58. Posted by Fourth Person | January 18, 2012 at 2:02 PM

    Y-y-you mean…FP III has to go…public? Is there no other way?

  59. Posted by Hugh Jorgen | January 18, 2012 at 3:09 PM

    are you ready for this??? huh…. are you?????…. so here we go: "Having a factual correlation analysis run on you is the NKI" – was that awesome or what?

  60. Posted by wahoo | January 18, 2012 at 4:06 PM

    Judging by your comment I bet you've got a face like a drive-in movie theatre and you dig a lot.

  61. Posted by PermaGuestII | January 18, 2012 at 4:11 PM

    Don't disregard MENA tensions and the unusual delta between dated Brent and WTI as contributors to atypical performance on a total return basis.

  62. Posted by dude who knows sam | January 18, 2012 at 4:34 PM

    Sam is actually a good dude. I can imagine a lot of us would have crossed this line if put in a similar situation.

  63. Posted by AlsoNotSam | January 18, 2012 at 4:43 PM

    Hi Sam. Yup you're right. Given the right motivation we're all one threat away from "crossing the line." In the parlance of our times…

    - Dude who abides

  64. Posted by VonSloneker | January 18, 2012 at 4:55 PM

    I would like Nadal to take him apart in straights…then when he goes to shake his hand tell him "Sampras in his prime would have sent you [Fed] home in a body bag." More than that, I'd like to know there will be an American, who isn't a Williams sister, still around by the quarters.

    - J. Courier

  65. Posted by FKApmco | January 18, 2012 at 5:27 PM

    Sorry P but I have to disagree with you. MENA, Brent and WTI are not sophisticated enough measures…I would even call them crude.

  66. Posted by Whitey Bulger | January 18, 2012 at 5:50 PM

    Agree!

  67. Posted by Yeah right | January 18, 2012 at 7:34 PM

    Surprising that Sam would do this, considering his 'religiousity'.

  68. Posted by bguyen | January 19, 2012 at 4:11 AM

    both!

  69. Posted by bguyen | January 19, 2012 at 4:16 AM

    Thought MF global sucked, love the Jints "jelling in a timely fashion" RISK ON!

  70. Posted by guest | January 19, 2012 at 8:10 AM

    forehead, dude. forehead. but at least they let him out of the cage now.

  71. Posted by Guest | January 20, 2012 at 5:47 AM

    http://www.zewp.com/dump/thumblist.php?show=fucky

    Safe, perhaps not for work, but then your comment wasn't either. It's just my favorite fuck yeah gif. (no nudity, sorry.)

  72. Posted by Guest | January 20, 2012 at 6:03 AM

    Seriously, you don't think the Feds are on a bit of a witch hunt with the 2012 elections coming up and the lame OWS protests? Where else is Barry going to pick up votes other than the OWS idiots, Greenies cheering the "death" of Keystone XL, three years of UI benefits losers, "bankster corruption" idiots, and mortgage cramdown beneficieries?

    If you think your profession is filthy and it makes you uncomfortable, then let Bess or other honorable ournalists know about it. F*ck's sake, I weep for this country sometimes.

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