Only Way To Get A Gold Star From Hedge Fund Manager Accused Of Insider Trading Was By Bringing Him Illegal Info, Says Underling

Alternatively, if you made the mistake of approaching Todd Newman with information that was obtained through legitimate means, 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.
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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.

Ex-Diamondback Capital analyst Jesse Tortora testified that the only time he made his “moody” and “verbally abusive” boss happy was by leaking him illicit stock tips. Tortora, 35, told a Manhattan federal-court jury yesterday that his former boss, Todd Newman, benefited from corporate secrets he gleaned from pals. Newman, a former Diamondback money manager, and Anthony Chiasson, co-founder of hedge fund Level Global Investors, are accused of trading on illicit tips obtained by a “corrupt network” of research analysts. Prosecutors claim Newman, 48, and Chiasson, 39, netted more than $60 million in profits by trading illegally in shares of Dell and Nvidia.

Tortora said his already rocky relationship with his boss grew worse after a widespread crackdown on insider trading on Wall Street led to the arrest of Galleon Group co-founder Raj Rajaratnam in 2009. The arrests made it harder to get tips. “Everybody was nervous. Everybody was anxious. People were a little bit reluctant to talk to each other,” he said. With Wall Street trembling in fear, Tortora said he turned to legitimate research, including analysis of publicly available data — but Newman wasn’t impressed. “I got little or no response,” he said of his clean reports. “It was in stark contrast to when I would call him up” with inside tips, he said...Tortora said he quit Diamondback in May 2010 following a shouting match with Newman, who he described as “verbally abusive.” I never knew who he was going to be when I talked to him,” he told the jury.

To review, for those who should find themselves working under Newman in the future: material, non-public information = good. Non-material, public information = "You do not hand in amateur crap like this, do you hear me? Do you understand me? You are scum. I should fire you and burn down your house. I am this close to raping you."

Insider Tips Chilled Out Angry Boss [NYP]

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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 Feds

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 club 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, gave fellow club member Danny Kuo a call at the direction of the FBI on December 1, 2010, a conversation that Chiasson and Newman's lawyers are 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." “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?” Despite losing major points for repeating the question-- you never repeat the question!-- and the extremely unconvincing "Oh, why do you ask" attempt to act natural and not like he was working for the government, Tortora ultimately recovered. After Kuo and Tortora discussed defense strategy to explain their trades were made after legitimate research, Kuo concluded the call with a final warning to Tortora about making future calls from a personal telephone, according to the transcript. “I would seriously invest in some quarters, and start calling from 7-Elevens,” Kuo said. Hedge Fund Founder Faces Jury as FBI Raids Yield Trial [Bloomberg]

Bernie Madoff Was Just Trying To "Change The Way Money Was Managed," Not That Anyone Cares

For about a year now, Bernie Madoff has been holding court with various members of the press about something that's been plaguing him: the fact that few people if any are willing to give credit where credit is due. Yes, he may have pleaded guilty to a $50 billion crime that ruined countless people's lives, including those of his wife and children, one of whom committed suicide as a result, but he did a lot of other stuff too, like run a "successful business" for which he won lots of "industry awards" during his "legitimate years." And, yet, everyone seems to forget all that when his name comes up, much like they conveniently forgot about how Mussolini made the trains run or time, or how Hitler built those wonderful autobahns, or how Ted Bundy made women feel special. And since he's serving a 150 year sentence, Berns has had lots of time to ponder why his years of legitimate achievements go unmentioned and the one thing he keeps coming back to? Irving Picard, who's pulled a fast one on you all, by suggesting that Bernie's crime started wayyyyy before it did, when, in fact, Madoff Securities was only running a Ponzi scheme for barely even 20 years. Examine the evidence Madoff shared with Forbes contributor Diana B. Henriques via email: Jan. 17, 2011 11:05 A.M. … Also remember that the U.S. Attorney admitted that they had no evidence that the crime started in the 80’s and could establish that Montauk and the N.Y. homes in Ruth’s name were not purchased with tainted funds … Mar. 10, 2011 7:35 A.M. … I would love to know what evidence [Picard] has to date my crime back to 1983 … THE FACT IS THAT THERE IS NONE. 8:05 A.M. … I say once again the fraud started in the 90’s … Mar. 18, 2011 9:26 A.M. … I guess I’m obsessed with this START OF CRIME ISSUE. Don't you see, idiots of the media?! That's the real issue here. Not the crime itself but the start of the crime. Do the math. Oct. 11, 2011 7:20 A.M. ... You can do a back of the envelope calculation as follows. From 1963 I made substantial arbitrage profits for the Picower, Shapiro and Chais families joined by the Levy family in 1970. [M]ost of these profits were re­invested and the amounts compounded. In 1970 Saul Alpern formed his partnerships later [run] by Avellino and Bienes. In 1980 I started trading for [French banker] Albert Igoin and his French and Swiss banking associates. All of these accounts averaged about 20% annually and were involved in various forms of convertible arb using bonds, pfds [preferreds], Rts. [rights] and units. [A]nd ALL WERE LEGITIMATE TRADING. THIS CONTINUED THRU THE EARLY 90’S. Nov. 24, 2011 6:51 P.M. … When you look at my RIDDLE [in the Nov. 23 letter], consider the fact that there was in fact no crime until I did not have enough capital in the firm to cover the losses. There is your real STORY The interesting thing here is not that there was an 11-figure fraud, okay? The interesting thing is how long the 11-figure fraud went on. And it stinks to high hell that that slippery fuck Picard and Co. are claiming it dates back to 1983 and that you're all buying it, hook, line and sinker. Come on, people. They're lawyers. Who are you gonna trust, them or a Ponzi schemer? But don't feel sorry for Bernie. Feel sorry for yourselves, for what could have been and what never was. Near the end of that e-mail the clouds of self-deception close in again, and Madoff turns himself into a pitiful martyr: “I made the tragic mistake of trying to change the way money was managed and was successful at the start, but lost my way after a while and refused to admit that I failed at one point.” HE WAS TRYING TO THE WAY MONEY WAS MANAGED! A legitimate way to make Ponzi scheme payments, before it was tragically snuffed out. Oct. 11, 2011 7:36 A.M. … I will never get over the distortions being presented by everyone as to the poor and now homeless when in fact they all signed documents when opening their accounts that they were sophisticated and had enough wealth to withstand the possible losses of short term trading. I wish I had saved the hundreds of letters I received thanking me for how I was responsible for their happiness over the years and their pleading with me to keep their accounts open when I tried to close them … when I worried about the wreckage I might cause if I couldn’t recover. Is the REAL STORY that the investor agreements specifically authorized BLMIS to make Ponzi scheme payments (a totally legitimate type of securities transaction, a short term trade if you will)? Unless someone pulls their head out of their ass, the world will never know. Exclusive: The Secret Madoff Prison Letters [Forbes]