Former SAC Capital Advisors LP manager Donald Longueuil, joining other defendants who have admitted wrongdoing in a nationwide insider-trading probe, will plead guilty to federal charges, a U.S. prosecutor said.
Assistant U.S. Attorney David Leibowitz told U.S. District Judge Jed Rakoff in Manhattan that Longueuil would enter a guilty plea today. The statement came during a hearing yesterday on whether to separate Longueuil’s case from co-defendant Winifred Jiau, a former hedge fund consultant for Primary Global Research LLC.
Longueuil, a former junior portfolio manager at SAC, and Jiau were accused of conspiring to commit securities and wire fraud from 2006 to 2010. They pleaded not guilty, rejecting U.S. allegations that nonpublic information Longueuil allegedly received was from an insider at Marvell Technology Group Ltd. or Nvidia Corp., or that Jiau received inside information.
The prosecutor’s statement came a few hours after he told Rakoff that Don Ching Trang Chu, a colleague of Jiau’s at Primary Global, was also in plea talks with the government. In the past week, ex-Galleon Group LLC trader Craig Drimal and lawyer Jason Goldfarb also have pleaded guilty to insider-trading charges as part of the related investigation.
The defendants are among about three dozen people charged in what prosecutors said was a series of insider-trading rings tied to Galleon and the indictment of the hedge fund’s co-founder, Raj Rajaratnam. Longueuil, Jiau and Chu were part of the third ring, the government said, involving the use of so-called expert networking firms that employed technology company insiders to provide nonpublic information to hedge fund clients.
Rajaratnam, 53, gained $63.8 million from tips leaked by corporate insiders and hedge-fund traders about stocks including Goldman Sachs Group Inc., Intel Corp. and Clearwire Corp., the U.S. alleged. Rajaratnam, who said he based the trades on research, faces as long as 20 years in prison if convicted of the most serious counts. The jury in his case completed its third day of deliberations yesterday.
At yesterday’s hearing in the Jiau case, Rakoff asked prosecutors if “Longueuil is pleading guilty tomorrow?”
“Your honor is correct, he is changing his plea,” Leibowitz said.
Craig Carpenito, a lawyer for Longueuil, didn’t return a voice-mail message left at his office yesterday.
Jiau is accused of passing inside information to an unidentified hedge-fund portfolio manager and to Noah Freeman, who was an SAC Capital portfolio manager based in Boston.
Joanna Hendon, a lawyer for Jiau, declined to comment.
Longueuil, who worked in SAC Capital’s CR Intrinsic unit in New York from July 2008 to July 2010, gave information to Freeman, who, in exchange, passed material non-public information to Longueuil that he had obtained from sources including Jiau, according to prosecutors.
“Longueuil communicated regularly with Freeman” and the unidentified co-conspirator “to share the material nonpublic information each learned from his respective sources,” according to the indictment. “These communications occurred over the telephone, as well as through e-mails and instant message communications.”
Prosecutors alleged that in addition to Freeman, Longueuil got inside information from unidentified public company employees and “independent research consultants.”
Longueuil would face as long as 20 years in prison if convicted of the most serious charge against him.
Charges against Longueuil were initially filed by Manhattan U.S. Attorney Preet Bharara in February when the office also announced insider-trading cases against Freeman, Samir Barai, the founder of Barai Capital Management, and Jason Pflaum, who worked for Barai. Pflaum pleaded guilty in December as part of a cooperation deal. Freeman pleaded guilty Feb. 7.
The charges are connected to earlier arrests of eight employees or consultants at Primary Global Research, a Mountain View, California-based expert-networking firm that links investors with industry experts who work for public companies.
Prosecutors said that after Longueuil read a news report on Nov. 19 about the government’s insider-trading probe, he went to his office at about 2 a.m. and took pliers to two external drives on his computer, destroying them. He then walked for 20 blocks, dumping the parts in four separate garbage trucks, prosecutors said.
“Chopped it up, chopped up everything,” Longueuil wrote in a text to Freeman, according to the criminal complaint.
SAC Capital, based in Stamford, Connecticut, has said it cooperated with the U.S. investigation.
The case is U.S. v. Jiau, 11-cr-00161, U.S. District Court, Southern District of New York (Manhattan).