Danielle Chiesi, a stock trader who pleaded guilty in the Galleon Group LLC insider trading case, had an “intimate relationship” with Hector Ruiz while he was chief executive officer of Advanced Micro Devices Inc. (AMD), a witness testified.
The testimony came yesterday from Anil Kumar, a government witness who was previously a managing director at McKinsey & Co. Kumar, who was a friend of Raj Rajaratnam’s, testified he secretly provided Rajaratnam with inside information about upcoming deals from 2004 to 2009.
Andrew Merrill, a spokesman for Ruiz, denied such a relationship with Chiesi existed.
“Any suggestion that the relationship was intimate is untrue,” Merrill said late yesterday.
Kumar testified he told Rajaratnam about AMD’s plans in 2008 to spin off a manufacturing entity for its microchips investments from sovereign wealth companies including Abu Dhabi’s Mubadala Development Co. Kumar said Rajaratnam warned him his information was no longer as useful because of Chiesi.
“He said there was someone on Wall Street that had an intimate relationship with my client, AMD, who was able to provide more information than I was,” Kumar testified, later identifying the individual as Chiesi.
Rajaratnam, 53, who has pleaded not guilty, is the central figure in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of making $45 million from confidential information leaked by corporate insiders and hedge fund traders.
Chiesi, a trader at New Castle Funds LLC, pleaded guilty in January. Prosecutors said she traded on leaks from Robert Moffat, a former International Business Machines Corp. (IBM) senior vice president, who also pleaded guilty. Both the U.S. and Moffat have said Chiesi had an “intimate relationship” with Moffat. Moffat said in a sentencing memo that Chiesi “played him” to obtain tips.
Alan Kaufman, a lawyer for Chiesi, didn’t return a voice- mail message seeking comment about his client.
The jury also heard more than a dozen wiretapped conversations in which Kumar kept Rajaratnam abreast of developments in the Mubadala deal, including the amount of money it was willing to spend.
For more, click here.
Pheim Asset Urges Court to Overturn Stock-Rigging Ruling
Tan Chong Koay and his Pheim Asset Management Sdn, each fined S$250,000 ($197,000) in Singapore’s first civil lawsuit for market manipulation, urged the city’s appeal court to overturn the ruling, saying the regulator was wrong in claims they tried to undermine the stock market.
“There was a genuine commercial intent to buy the shares,” Vinodh Coomaraswamy, Tan and Pheim’s lawyer, said at the appeal hearing yesterday. The court reserved its decision, giving no indication of when it would rule.
The Monetary Authority of Singapore, which sued Pheim and Tan, urged the court to dismiss the appeal, saying the integrity of the city’s market would be undermined otherwise. The regulator has stepped up oversight of the industry even as the city attracts funds including Fortress Investment Group LLC to set up shop. The central bank published 54 enforcement actions on its website in 2010, three times more than a year earlier.
Pheim and Tan, named one of five successful Singapore-based boutique fund managers by the Government of Singapore Investment Corp. in 2002, have denied rigging the stock and said they’re “value” investors. They bought almost 90 percent of the traded shares of United Envirotech Ltd. (UENV) from Dec. 29 to Dec. 31, 2004. The shares rose 17 percent over the three trading days.
“This is a pretty awful case” of market manipulation, Cavinder Bull, the monetary authority’s lawyer, told the court yesterday. “This is a very experienced man who does it and conceals it.”
Tan declined to comment after the hearing yesterday.
The case is Tan Chong Koay v Monetary Authority of Singapore, CA186/2010 in the Singapore Court of Appeal.
For more, click here.
For the latest trial and appeals news, click here.
Former Turquoise CEO Lederman Sues LSE Unit Over Dismissal
Former Turquoise Chief Executive Officer Eli Lederman is suing for unfair dismissal, saying restrictions were placed on him when he left the alternative trading system following its merger with a London Stock Exchange Group Plc (LSE) unit last year.
Lederman, 47, said constraints placed on him after he left the company were a “deliberate” and “egregious usurpation of rights” and that LSE has failed to turn over all the documents he has sought. The case is scheduled to be heard at a London Employment Tribunal this week, the court said.
“Serious questions still remain about the LSE Group’s compliance with its legal obligations to disclose relevant evidence in its possession,” he said in the e-mail. “To date, no e-mails related to my dismissal have been disclosed from Xavier Rolet or between LSEG and any bank shareholder.”
LSE completed its purchase of Turquoise in February 2010 to compete with so-called multilateral trading facilities that were backed by banks and brokers. LSE, led by CEO Rolet, last month agreed to buy the owner of the Toronto Stock Exchange for about $3.2 billion in stock.
LSE said last year that Lederman was “stepping aside” following the completion of the merger and that it replaced him with David Lester, the director of information Services at LSE. Jonathan Blostone, a spokesman for London-based LSE, declined to comment yesterday.
Moog Sued by B. Braun Over Medication-Pump Supply Contracts
Moog Inc. (MOG/A), a provider of equipment used in the medical and aerospace industries, was sued by a unit of German health-care product maker B. Braun Melsungen AG for allegedly violating a contract to supply electronic pumps used to deliver intravenous medications.
Braun said it will be unable to meet its obligations to customers and patients, and its reputation will be damaged, unless Moog ships the equipment as agreed, Melsungen-based Braun said in papers filed by its attorney Colm F. Connolly March 11 in Delaware Chancery Court in Wilmington.
“Defendants have refused to honor any B. Braun purchase orders for the products unless it incorporates a price increase unilaterally imposed by defendants far in excess of the applicable Consumer Price Index,” which limits prices under the contract, Connolly told Judge Donald Parsons in a letter asking the court to fast-track the case.
Braun, with about $5.61 billion in sales for 2009, makes equipment for intensive-care units, anesthesia, blood treatment and emergency care. East Aurora, New York-based Moog, with $2.11 billion in fiscal 2010 revenue, also makes precision motion- control systems for aerospace and military applications.
Ann Marie Luhr, a Moog spokeswoman, didn’t return a voice- mail message seeking comment on the lawsuit.
The case is B. Braun Medical Inc. v. Moog Inc., CA6264, Delaware Chancery Court (Wilmington).
Duncan Energy Sued by Shareholder Over $2.4 Billion Purchase
Enterprise, the biggest U.S. pipeline partnership, announced on Feb. 23 plans to reacquire its former subsidiary in an all-stock deal in which Duncan holders would get 0.9545 unit of Enterprise for each unit they own. The exchange ratio fails to compensate the partnership’s unit holders for their interest in future performance, shareholder Sanjay Israni said in a complaint.
“The proposed acquisition is expected to significantly improve the growth and value of Enterprise,” lawyers for Israni said in the complaint filed March 11 in Delaware Chancery Court.
Enterprise, which sold units of Duncan Energy in a 2007 initial public offering, is seeking to buy the 42 percent of the company it doesn’t already own. The deal represents a 28 percent premium over Houston-based Duncan’s closing price on Feb. 22.
Israni is seeking to represent all Duncan Energy unit holders.
Officials at both companies couldn’t immediately be reached for comment.
The case is Israni v. Duncan Energy Partners LP, CA6270, Delaware Chancery Court (Wilmington).
For the latest new suits news, click here. For copies of recent civil complaints, click here.
Madoff Trustee Amends Confidentiality Proposal After Protest
The trustee liquidating Bernard L. Madoff’s defunct firm amended a confidentiality proposal that UBS AG (UBSN) said would give him “carte blanche” to disclose private material to 4,000 parties including rival banks.
Trustee Irving H. Picard, who is fighting more than 1,000 lawsuits seeking $100 billion for investors in the Ponzi scheme from 4,000 defendants, asked a judge to approve a modified version of the proposal, according to a court filing.
Confidential information supplied by parties being sued wouldn’t be -- and was never meant to be -- disclosed to all defendants, and prior agreements to keep information private would be honored, Picard said in the filing yesterday in U.S. Bankruptcy Court in Manhattan.
UBS objected earlier this month that under Picard’s new rules, names and account numbers of Madoff customers, amounts of withdrawals, redemptions, transfers and transferees would lose their protection, making confidentiality “entirely illusory.”
The Swiss wealth manager’s protest was one of at least eight objections filed in court on March 2 by banks and investment managers including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and HSBC Holdings Plc. (HSBA)
A hearing on Picard’s amended proposal is set for March 31.
The UBS case is Picard v. UBS AG, 10-ap-4285, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Renault’s Ghosn, Pelata Return Bonuses Over Bungled Spy Case
Renault SA (RNO) Chief Executive Officer Carlos Ghosn gave up his bonus and turned down second-in-command Patrick Pelata’s resignation after the company admitted wrongfully accusing senior managers of spying.
The French carmaker also announced disciplinary action against three of its security officers and pledged compensation and reinstatement for upstream development chief Michel Balthazard and two other executives fired on suspicion of selling company secrets.
Pelata’s resignation was rejected “in the interests of Renault,” the CEO said on TF1 television. “I didn’t want to add crisis to crisis.” Ghosn, Pelata and other executives involved in the case will return 2010 bonuses and receive no stock options this year, the company said after an emergency board meeting.
The carmaker retracted its espionage claims yesterday after Paris Chief Prosecutor Jean-Claude Marin said they had been discredited by police. Pelata had pledged earlier this month that managers would be held accountable “all the way up to me” if the three were cleared.
Balthazard, his subordinate Bertrand Rochette and deputy electric-car program chief Matthieu Tenenbaum were fired in January after a company investigation concluded they had received payments from Chinese companies via foreign accounts.
The case against them was based on verbal information obtained by security manager Dominique Gevrey from an undisclosed source, for which Renault had paid more than 300,000 euros, the prosecutor said yesterday.
“We were able to rule out the claims presented in Renault’s complaint within a very short period,” Marin said at a press conference, a day after Gevrey was jailed to face charges of “organized fraud.”
Cooperation from the Swiss and Liechtenstein authorities rapidly established that the alleged bank accounts did not exist, Marin said. Gevrey, a former French intelligence agent who still refuses to say where he got the information, was arrested March 11 at Paris Charles de Gaulle airport as he prepared to board a flight to Africa, he said.
Gevrey’s attorney did not return calls or messages left at his office outside of regular office hours.
In its statement, the carmaker announced closer supervision of its security officials and a governance review designed to “restore Renault’s image and trust in the company and its leaders.”
For more, click here.
Allen Stanford’s Bail Request Denied by U.S. Appeals Court
Indicted financier R. Allen Stanford was denied release from prison while he awaits trial on charges he led a $7 billion investment swindle.
A U.S. appeals court in New Orleans issued the ruling yesterday in Stanford’s fourth bid to be allowed to post bail. Stanford, 60, has been detained since June 2009 because of concern that he might try to flee.
“We dismiss this appeal for lack of jurisdiction,” the three-judge appellate panel said in a ruling posted to the court’s website.
The appellate court refused three times before to order Stanford’s release based on what he claimed were violations of his constitutional rights. The former billionaire alleged in the latest request that he has been denied his right to a speedy trial under a federal statute that guards against unreasonable prosecution delays.
Stanford was deemed a flight risk by U.S. District Judge David Hittner of Houston, who ordered him held without bond after the Stanford Group Co. founder was indicted on 21 criminal counts in June 2009.
Ali Fazel, one of Stanford’s criminal defense lawyers, said the legal team is considering its next moves.
The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas).
For the latest lawsuits news, click here.
UBS Client in San Diego Gets Probation for Hiding Accounts
A UBS AG client in San Diego was sentenced to three years probation after pleading guilty to hiding assets in his Swiss bank accounts from the U.S. Internal Revenue Service.
Jeffrey Chatfield, a consultant who advised private companies that sought to go public, was also ordered to pay $96,000 to resolve his civil liability with the IRS, the U.S. Justice Department said yesterday in a statement.
Chatfield filed false tax returns from 2000 through 2008 in which he failed to disclose his Bahamian and Swiss accounts at UBS and Credit Suisse Group AG (CSGN), according to the Justice Department’s statement. The accounts held as much as $900,000 in untaxed securities and cash Chatfield received in 2000 from his consulting work, according to the statement.
UBS provided U.S. officials with Chatfield’s identity and account information as part of a deferred prosecution agreement under which the Zurich-based bank admitted helping U.S. taxpayers hide accounts from the IRS, the Justice Department said. Chatfield had moved his assets to a Credit Suisse Group AG account in 2004 and that bank told him in 2008 it was closing all accounts held by U.S. taxpayers, according to the statement.
Chatfield’s lawyer, Richard Carpenter, didn’t immediately return a call to his office.
The case is U.S. v. Chatfield, 10-4546, U.S. District Court, Southern District of California (San Diego.)
Samsung Agrees to $33.3 Million Settlement in Antitrust Case
Samsung Electronics Co. agreed to pay $33.3 million to resolve a civil class-action lawsuit claiming it conspired with other semiconductor makers to fix prices of memory chips used in computers and mobile phones, according to court documents.
The accord, which is subject to court approval, resolves lawsuits filed on behalf of individuals and businesses that directly purchased static random access memory chips from 1995 to 2005, according to a March 11 filing in federal court in San Francisco by attorneys for the buyers.
Samsung, the world’s largest maker of memory chips, denied wrongdoing, according to the settlement agreement signed by the company’s attorneys, also filed in San Francisco. Michael Scarborough, an attorney for Samsung, confirmed the settlement in a telephone interview.
A 2007 group complaint claimed the conspiracy among manufacturers drove up prices charged for SRAM in the U.S. Six companies, including NEC Electronics, resolved the claims last year, bringing total settlements in the case to $76.9 million, according to March 11 court filings. Lawyers for the plaintiffs are seeking fees worth 30 percent of the total settlements plus interest, according to the filings.
The case is In re Static Random Access Memory Antitrust Litigation, 07-01819, U.S. District Court, Northern District of California (Oakland).
Goldman Ex-Programmer Should Get Up to 10 Years, U.S. Says
Former Goldman Sachs Group Inc. (GS) computer programmer Sergey Aleynikov should get as much as 121 months in prison for stealing the firm’s computer source code, U.S. prosecutors said in a court filing.
Aleynikov, convicted in December of violating the Economic Espionage Act and the Interstate Transportation of Stolen Property Act, has asked to be given probation when he is sentenced by U.S. District Judge Denise Cote on March 18. Prosecutors cited Aleynikov’s alleged history of violating intellectual property laws, asking Cote to sentence him to 97 to 121 months.
“Aleynikov was simply a thief motivated by greed, someone who sought to benefit from the valuable intellectual property of his employer to make money for himself and his new company,” prosecutors said in a sentencing memorandum filed in Manhattan federal court March 11.
On Feb. 24, Cote ordered Aleynikov, who had been free on bond, jailed before sentencing because she deemed him a flight risk. Aleynikov, who is a naturalized U.S. citizen, holds dual U.S.-Russian citizenship, said his attorney Kevin Marino.
The case is U.S. v. Aleynikov, 1:10-cr-00096, U.S. District Court, Southern District of New York (Manhattan).
Former Taylor Bean President Pleads Guilty to Fraud Charge
Raymond E. Bowman, the former president of Taylor, Bean & Whitaker Mortgage Corp., pleaded guilty to two charges over his role in what U.S. prosecutors said was a $1.9 billion fraud scheme.
Bowman, 45, who lives in Atlanta, entered his plea yesterday in federal court in Alexandria, Virginia, to one count of conspiracy to commit wire fraud, bank fraud and securities fraud and one count of making false statements. Bowman also agreed to cooperate with prosecutors’ probe of the company.
Federal prosecutors filed a criminal case against Bowman last week before U.S. District Judge Leonie Brinkema, who has presided over cases resulting from an alleged scheme that the U.S. said sought to defraud the government’s Troubled Asset Relief Program and contributed to the failure of Montgomery, Alabama-based Colonial Bank.
Bowman faces a maximum sentence of five years in prison on each count, plus a fine of as much as $500,000 and full restitution to victims, according to prosecutors.
Prosecutors said officials at Taylor Bean conspired with officials at Colonial Bank to transfer more than $400 million between the bank and the mortgage lender to hide Taylor Bean overdrafts.
The case is U.S. v. Bowman, 11-cr-00118, U.S. District Court, Eastern District of Virginia (Alexandria).
For more, click here.
For the latest verdict and settlement news, click here.
To contact the editor responsible for this story: David Rovella at email@example.com.