Bharara announces new prosecution教育阿特拉斯大學
未找到專案。
Bharara announces new prosecution

Bharara announces new prosecution

3 分鐘
|
January 21, 2012

Preet Bharara, U.S.

attorney for the judicial district that includes Manhattan, this week announced his latest prosecution of what he now calls the “routine” Wall Street practice of “insider trading.” His targets, in the words of the formal complaint: a “circle of friends” who “exchanged the Inside Information for the purpose of executing profitable securities transactions.” According to the complaint , by anticipating that Dell stock would decline after the computer maker announced its results for the second quarter of 2008, one hedge fund was able to make $53 million.

The complaint identifies seven members of the circle of friends, three of whom had already turned on the others, pleading guilty and assisting with the investigation in the hopes of reducing their sentences. The other four were arrested this week. (That includes the one who apparently wasn’t home when the FBI turned up to arrest him: he turned himself in later the same day.)

One of the cooperators is Sandeep Goyal, a former Dell employee who until recently worked at an investment firm. Prosecutors say he passed information about Dell’s numbers to Jesse Tortora, another cooperator, who in turn passed it to Spyridon Adondakis, now a cooperating witness, and Todd Newman, Jon Hovarth, and Danny Kuo, now defendants. Adondakis, prosecutors say, relayed the information to defendant Anthony Chiasson. The complaint says Goyal got his information from a source inside Dell, but it does not name the source; Bharara said the source “is not a defendant in the documents unsealed today” but did not rule out future charges .

David Frink, a Dell executive, said the source was no longer an employee and the company had cooperated in the investigation. “If the allegations are accurate, the action was a clear violation of Dell’s policy regarding disclosure of material, nonpublic information,” he said. “All Dell employees are required annually to complete training on the company’s code of conduct, which includes a section on insider trading.”

Lawyers for Chiasson and Horvath said their clients would be shown to be innocent.

The complaint does not name the firms for which the defendants worked, but media reports have identified them. Defendant Newman (and cooperator Tortora) worked for Diamondback Capital Management. Defendant Chiasson (and cooperator Adondakis) worked for Level Global Investors. Defendant Horvath worked for SAC Capital Advisors LP’s Sigma Capital Management. Defendant Kuo worked for Whittier Trust Co. The seventh financial professional in the case, Goyal, who got the information from the source inside Dell and is now cooperating with the government, worked for another firm, but is not accused of illegally trading on its behalf.

Bharara called the trades that made $53 million for Level Global “an enormous bet” that “wasn’t much of a gamble because the game was rigged.” But the complaint, which includes the text of an apparently key email, says that much of Level’s alleged insider trading—which put it short 8.6 million shares of Dell when the company released its August 28, 2008, quarterly report of earnings—took place after Chiasson told Adondakis to analyze the effect his information would have on Dell’s stock price.

In addition to the $53 million Level Global made by anticipating Dell’s disappointing news, the complaint details alleged transactions made by Chiasson’s firm around Dell’s release of quarterly results that exceeded expectations in May 2008, by Newman’s firm around both announcements, and by Horvath’s firm around the August announcement. In each case, according to the complaint, the defendant’s firm made a profit of approximately $1 million or more. The document also says advance information allowed Kuo’s firm to avoid about $78,000 in losses by shedding Dell stock in the summer of 2008.

Unsurprisingly, the complaint does not show that any person or corporation was in any way harmed by the alleged insider trading. As I have argued, insider trading should not be a crime .

The Securities and Exchange Commission has filed a civil complaint , and more criminal charges may be forthcoming .

About the author:
未找到專案。
未找到專案。