Former SAC Capital Advisors LP portfolio manager Donald Longueuil deserves a prison term of 46 to 57 months for his role in a hedge-fund insider-trading ring, U.S. prosecutors said.
That sentence “is needed to deter Wall St. professionals like Longueuil from engaging in similar offenses and to restore integrity to the capital markets by reassuring the investing public that when those who commit insider trading are caught red-handed, they will face fair and equitable justice,” prosecutors said in a memo filed today in Manhattan federal court.
Longueuil, 35, pleaded guilty April 28 to conspiracy to commit securities and wire fraud and to securities fraud in a case that was part of a U.S. crackdown of insider trading at hedge funds involving so-called expert networks and insiders at technology companies.
Longueuil, who remains free on bond, is scheduled to be sentenced by U.S. District Judge Jed Rakoff on July 29. His lawyer, Craig Carpenito, declined to comment on the government’s memo and said he would file a sentencing memorandum with the court tomorrow.
The insider-trading investigation targeted another former SAC portfolio manager, Noah Freeman, as well as Samir Barai, founder of Barai Capital Management, and Jason Pflaum, who worked for Barai. Prosecutors said Longueuil, Barai and Freeman were friends who pooled their illegal information to get a trading edge.
Freeman, Barai and Pflaum have all pleaded guilty. One of the sources the three used for inside information, Winifred Jiau, a former consultant at expert-network firm Primary Global Research LLC, was convicted after a trial in New York last month. James Fleishman, a Primary Global sales executive, has pleaded not guilty and is scheduled to go on trial Aug. 29.
SAC Capital, based in Stamford, Connecticut, has said it cooperated with the investigation. Jonathan Gasthalter, a spokesman for SAC Capital, said Freeman and Longueuil were both dismissed from SAC in 2010 because of poor performance.
Of the 14 people charged by Manhattan U.S. Attorney Preet Bharara’s office since November in the investigation, 12 have pleaded guilty.
As part of the conspiracy, which prosecutors said ran from 2006 to 2010, Longueuil and his co-defendants conspired to obtain inside information about companies including Marvell Technology Group Ltd. (MRVL), Fairchild Semiconductor International Inc. (FCS), Advanced Micro Devices Inc. (AMD), Actel Corp. (ACTL) and Cypress Semiconductor Corp. (CY), the U.S. said.
Longueuil, who worked in SAC Capital’s CR Intrinsic unit in New York from July 2008 to July 2010, was accused of giving information to Freeman. Freemen, in exchange, passed material non-public information to Longueuil that he had obtained from sources including Jiau, according to prosecutors.
Longueuil admitted that after reading a newspaper article about a federal probe of Mountain View, California-based Primary Global, he went to his office and took pliers to two drives on his computer, destroying them. Prosecutors said he walked 20 blocks, dumping the parts in four separate garbage trucks.
At the time of his plea, Longueuil agreed to forfeit more than $1.25 million in profits from the scheme.
The case is U.S. v. Longueuil, 11-CR-00161, U.S. District Court, Southern District of New York (Manhattan).
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