Of all the hedge funds affected by the government’s crackdown on insider trading, SAC Capital has topped the field in both fines paid and traders charged (can’t give you an exact figure at the moment but it’s “requires spreadsheets to keep track of all the cases” big). And while recognition of peerless achievement is always nice, Steve Cohen has gotten a little tired of waking up to find out another one of his employees chopped up evidence of wrongdoing and scattered it through Manhattan, or (allegedly!) sold stock based on material, non-public information passed on by friends in the medical profession.
Although one would have thought a simple “cool it with the securities fraud, you idiots” or a diagram of a foot in an ass would have sufficed re: sending a message that SAC has had it up to here with people trading in the sort of way the SEC frowns upon, apparently some hard and fast policy changes were necessary. They include:
1. Compensation clawbacks for employees “facing criminal or civil cases,” for whom the possibly of prison is not enough of a deterrent.
2. Requiring portfolio managers to get permission from compliance before taking calls with expert network analysts, after the first four freebies. Read more »
At trial, Mr. Nguyen testified that Ms. Jiau repeatedly pestered him with phone calls on his cellular phone and at home before Nvidia was set to report earnings in August 2008, seeking details about the company’s financials. Mr. Nguyen said he finally broke down and shared information about Nvidia’s current and future revenue, gross margins and other financial data after she interrupted him while he was bathing his young son. He pleaded guilty to criminal charges and avoided jail time after he cooperated with prosecutors. [WSJ]
As you may have heard, earlier today, Mathew Martoma, a former portfolio manager in SAC Capital’s CR Intrinsic unit, was charged with allegedly running “the most lucrative insider trading scheme ever,” netting $276 million for the fund. He did so based on information that was given to him by Sid Gilman, a University of Michigan neurologist and chair of a “safety-monitoring committee that oversaw a clinical trial by Wyeth LLC and Elan Corp. into whether the drug bapineuzumab, or bapi, was safe for patients with mild-to-moderate Alzheimer’s disease.” Over an 18-month period, Gilman and Martoma met 42 times, in addition to emailing and chatting over the phone. For example: Read more »
Winifred Jiau, a former consultant with expert networking firm Primary Global Research LLC, lost a post-trial bid to overturn her convictions on charges related to insider-trading. U.S. District Judge Jed Rakoff denied Jiau’s motion for an acquittal or a new trial in federal court in Manhattan, where she was convicted June 20 of conspiracy and securities fraud. The jury found her guilty of passing information regarding earnings and other matters on Nvidia Corp. (NVDA) and Marvell Technology Group Ltd. to hedge fund managers Noah Freeman, a former SAC Capital Advisors LP portfolio manager, and Samir Barai, founder of New York-based Barai Capital Management LP. Jiau, of Fremont, California, faces as long as 25 years in prison when she is sentenced by Rakoff. [Bloomberg, earlier]
Yesterday afternoon, former Primary Global consultant Walter Shimoon pleaded guilty to passing inside information to his hedge fund clients. According to court documents, Kingdom Ridge Capital made about $560,000 in October 2009, based on Shimoon’s tips about Apple. We now know that the expert network analysts’ material non-public information was about the iPhone 4 and the iPad, though at the time, in the case of the latter product, Shimoon struggled to explain what he was talking about. Here’s how he described the iPad, which had not yet been unveiled, to Kingdom: Read more »
Winifred Jiau, the Primary Global consultant who worked closing with, among others, ex-SAC portfolio manager Noah Freeman, was found guilty on insider trading charges this morning, after two days of jury deliberations. The 43 year-old Jiau now faces up to 20 years for securities fraud and an additional five years for conspiracy. For the math whizzes in the group, that means she’ll be a mere 68 years old when sprung free. If you’ve been keeping up, you know even those who Wini drove to fantasies of killing her and making it look like an accident (no names: Noah Freeman) couldn’t deny she was the best at providing material non-public information and since there’s no reason to believe she won’t keep her skills sharp while in the joint, anyone looking to hook up with her in 2036 would be wise to write the following down. Read more »
As we have learned from former SAC trader Noah Freeman’s extensive testimony in the government’s insider trading case du jour, expert network analyst Winifred Jiau had a tendency to act irrational, demanding and sometimes plain bitchy. Whether her behavior stemmed from a power trip associated with realizing she was the person anyone who was anyone in the insider trading space wanted to work or she was simply born that way is unclear but regardless, while it may have annoyed some clients, it didn’t stop anyone from buying what she was selling, i.e. inside information that was “precise to the decimal.” Freeman, for example, has go so far as to praise her tips as best in class while sharing that he fantasized about doing her bodily harm, such as when she would make what he felt to be absurd requests like two (2) iPhones, gift cards to clothing stores, the Cheesecake factory and a dozen Thanksgiving lobsters. Apparently, though, the stuff wasn’t for Jiau. She just needed it to land another member of her “club.” Read more »