A lawyer for Level Global Investors LP co-founder Anthony Chiasson told jurors at his client’s insider-trading trial that the key government informant is a liar whose testimony wasn’t supported by the evidence.
Reid Weingarten, the attorney, said Spyridon “Sam” Adondakis, who once served as an analyst for Chiasson, lied to the fund manager, hid the fact that he was giving the portfolio manager nonpublic information, and continued to lie on the witness stand when he testified for the prosecution.
“Sam Adondakis is a liar,” Weingarten said yesterday in his closing arguments. “Sam Adondakis will lie when it is in his interest. No doubt. You can’t get around that.”
Chiasson is on trial with former Diamondback Capital Management LLC portfolio manager Todd Newman. They are accused of reaping more than $70 million on trades based on illicit tips provided by analysts who worked for them. Both pleaded not guilty. Jury deliberations began yesterday afternoon.
Adondakis testified he was part of a group of friends who were hedge fund analysts. They obtained nonpublic information from insiders at technology companies including Dell Inc. (DELL) and Nvidia Corp. (NVDA) He said he passed the illegal tips to Chiasson, who traded on them.
He and five others who were part of the scheme have pleaded guilty, including his friend, Jesse Tortora, who was Newman’s analyst at Diamondback.
Chiasson and Newman are charged with conspiracy and securities fraud. The latter crime carries a term of as long as 20 years in prison.
While Adondakis testified that he gave Chiasson nonpublic information from company insiders that he got from Tortora, Weingarten said Adondakis frequently edited the information he sent the portfolio manager, omitted the source and claimed analyst research done by Tortora as his own.
Weingarten argued there was no direct evidence corroborating Adondakis’s claims that Chiasson knew about the scheme. The lawyer showed jurors e-mails Adondakis sent Chiasson and compared them to the original e-mails Adondakis received from Tortora. The messages Chiasson received were edited down by Adondakis with some information modified or removed, Weingarten said. He said his client never knew the analyst’s information was illicitly obtained.
“The bottom line is that there was a profound difference between information that was going on in the group and the information Adondakis was sharing with Chiasson,” Weingarten said.
Adondakis, caught committing insider trading, eagerly decided to give investigators Chiasson, who Weingarten said wasn’t part of the analysts’ scheme. When Adondakis made consensual recordings of telephone conversations he had with a co-conspirator, the men mentioned “big fish,” Weingarten said.
“They wanted a big fish, a portfolio manager” Weingarten said.
“They wanted to go after the biggest fish that they can get,” he said. “Sam Adondakis saw his way out of trouble by making a case against his boss.”
The government said that in 2008, Chiasson and Level Global earned $57 million on illegal tips on Dell, while Newman and Diamondback earned $3.8 million on the alleged secret information about Dell. In 2009, Chiasson and his fund earned $10 million on Nvidia tips while Newman and Diamondback earned $48,000, prosecutors said.
U.S. District Judge Richard Sullivan, who’s presiding over the trial, began giving the jury legal instructions this afternoon. He told jurors they would begin their deliberations after he concludes the instructions.
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