Four men arrested last month for allegedly participating in a “criminal club” of inside traders that reaped almost $62 million from Dell Inc. shares were indicted by a federal grand jury in Manhattan.
One trade earned a $53 million illegal windfall for Level Global Investors LP co-founder Anthony Chiasson and his fund, Manhattan U.S. Attorney Preet Bharara alleged. The ring, which involved five hedge funds and investment firms, is the largest identified by the U.S. to date tied to a single stock, federal authorities said.
Chiasson; Todd Newman, a portfolio manager formerly at Diamondback Capital Management LLC; Jon Horvath, an analyst at Connecticut-based hedge fund Sigma Capital Management LLC; and Danny Kuo, a fund manager for Whittier Trust Co. in South Pasadena, California, were all named today in an indictment filed in federal court in New York.
All four men were charged with one count of conspiracy to commit securities fraud. Newman was charged with three counts of securities fraud and Chiasson with four counts of securities fraud. Horvath and Kuo were additionally charged with one count of securities fraud. All four were arrested Jan. 18.
Illegal profits earned from the scheme were almost of the same “magnitude of fraud we proved in the Galleon Group insider trading scheme,” Bharara said.
A five-year insider-trading probe by Bharara’s office and the Federal Bureau of Investigation in New York called “Perfect Hedge” has resulted in charges against 63 people, said Janice Fedarcyk, head of the FBI’s New York office.
More than 50 have pleaded guilty or been convicted after trial since 2009, including Galleon Group LLC co-founder Raj Rajaratnam, who is serving an 11-year prison sentence.
Three men who were charged in the scheme to illegally trade in Dell stock have pleaded guilty and are cooperating with the U.S. -- Jesse Tortora, formerly of Diamondback; Spyridon “Sam” Adondakis, a Level Global analyst; and Sandeep Goyal, a former employee at Round Rock, Texas-based Dell, according to Bharara and court records.
After a federal grand jury returned the indictment today, the case was assigned to U.S. District Judge Richard Sullivan. Last year, Sullivan presided over the trial of ex-Galleon Group LLC trader Zvi Goffer, his brother Emanuel Goffer and Michael Kimelman.
Sullivan sentenced Zvi Goffer to 10 years in prison, saying, “Anything less than that would send the wrong message.”
The criminal case is U.S. v. Newman, 12-cr-121, U.S. District Court, Southern District of New York (Manhattan). The civil case is Securities and Exchange Commission v. Adondakis, 12-409, U.S. District Court, Southern District of New York (Manhattan).
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