Alternatively, if you made the mistake of approaching Todd Newman with information that was obtained through legitimate means, Jesse Tortora claims you’d be on the receiving end of a death stare the first time and a “What did I tell you about coming in here with a trade idea you ‘thoroughly researched’? Get the fuck out of my office and don’t ever waste my time with this garbage again,” on subsequent occasions. Read more »
Only Way To Get A Gold Star From Hedge Fund Manager Accused Of Insider Trading Was By Bringing Him Illegal Info, Says UnderlingBy Bess Levin
Members Of Insider Trading “Club” Were Good At Obtaining Material Non-Public Information, Not So Good At Playing It Cool On Conversations Recorded By The FedsBy Bess Levin
Later this week, Anthony Chiasson, a Level Global co-founder, and Todd Newman, a former Diamondback portfolio manager, will go to trial in Federal Court for allegedly making $67 million in ill-gotten gains, based on inside information they obtained about Nvidia Corp and Dell Inc. According to U.S. Attorney Preet Bharara, Chiasson and Newman, who’ve both pleaded not guilty, were able to rack up all their profits by teaming up with a bunch of friends and forming an insider trading club, which is a lot like a book club or fight club in that they took roll, traded canapé duties, and drank Pinot Grigio, but different in that instead of discussing The Art Of Fielding or punching each other in the face, they spent every Monday night from 7 to 9 sharing material non-public information with each other.
“This case describes a tight-knit circle of greed on the part of professionals willing to traffic in confidential information,” Bharara said when the charges were announced in January. “It was a circle of friends who essentially formed a criminal club, whose purpose was profit and whose members regularly bartered inside information.”
In the beginning, when the club was first formed, there was a spirit of camaraderie, as the members happily traded tips for everyone’s mutual benefit. Unfortunately, things started to break down when some people agreed to cooperate with the government by recording their friends admitting wrongdoing in exchange for leniency. Former Diamondback analyst Jesse Tortora, for instance, attempted to incriminate fellow club member Danny Kuo on a call the FBI directed him to make on December 1, 2010, a conversation that Chiasson and Newman’s lawyers are now trying to use as evidence that Tortora, who will be testifying against them lacks credibility, based on the fact that when asked by Kuo if his phone was being tapped, Tortora didn’t say “Yup! Helping the Feds build a case against you, actually.” Instead he went with this:
“What’s happening, man?” Tortora asked during the call, according to a transcript prosecutors submitted to the court.
“Dude, is your phone tapped?” Kuo replied.
“Wait, is the phone tapped?” Tortora asked, adding, “Why do you ask that?”
The $1 billion dollar figure was tallied up prior to today’s 5PM deadline to withdraw, so it may be higher. On the bright side, it could’ve been worse, but preventative measures- ‘around 29% of its $5.8 billion in capital is in multi-year lock-ups’- were in place. [WSJ]
Potential Collateral Damage From Insider Trading Fest(ivus) The Feds Probably Didn’t Stop To Think AboutBy Bess Levin
At Zayna’s Metro Cafe, a New York-style deli that opened earlier this year in Stamford, Chef Aly Allam says he hopes things go back to normal for Diamondback, where the traders are such regular customers he often puts a Diamondback Special on the menu. “They are some of my biggest customers, if they close that’s almost half my business,” the chef told Reuters, saying that maybe 20 Diamondback traders a day frequent his cafe’s busy lunch hour. [Reuters]
“Executives at Diamondback, where FBI agents had ordered employees to put their hands in the air as they entered the premises, also were said to have been caught off guard — especially so because Peter Derby, a former top SEC official, is an employee of the fund.” [Reuters]
Great news, Diamondback investors: your money has (mostly) not been tainted. Read more »
According to Charlie Gasparino, at least one of the aforementioned “low-level” Goldman employees rumored to be tied to the government’s Insider Trading Fest(ivus) 2010 “got roped into the investigation by ‘some sort of association’ with Diamondback Capital Management LLC.” Still unclear: how low we’re actually talking (e.g. first years, summer interns, etc).
Anyone thinking of making any sudden moves should remember this. Read more »