Former Diamondback Capital Management LLC analyst Jesse Tortora said he was paid a bonus of more than $2 million the year illegal tips he provided his boss on Dell Inc. helped earn the fund more than $3.8 million.
Tortora is the first of a group of former hedge-fund analysts who are cooperating with the U.S. and testifying at the insider trial of SAC Capital Advisors LP fund manager Michael Steinberg. Prosecutors say Steinberg, who has pleaded not guilty, earned more than $1.4 million on illegal tips fed to him by his former analyst, Jon Horvath. Tortora testified he provided Horvath with secret earnings information about Dell in 2008 and on Nvidia Corp. in 2009.
The former Diamondback analyst told a Manhattan federal jury today that he shared inside information he obtained from insiders at technology companies with Horvath and a group of analysts who were friends from 2007 to early 2010.
Tortora said he funneled the information to his boss, former Diamondback fund manager Todd Newman, and testified Horvath told him he was providing Steinberg with the same tips which he traded on.
Tortora testified he earned more than $3.4 million during the three-and-a-half years he worked at Diamondback and was paid more than $2.25 million in salary and bonus in 2008 -- the year of the successful Dell trade. Steinberg made more than $1 million for SAC based on the same illegal tip about Dell, which was provided to him by Horvath, prosecutors said.
Asked how much money he had now, Tortora said he has about $100,0000 left from his years on Wall Street.
“While I was there I spent money a bit excessively,” Tortora testified. “I lost a lot of money doing two things, by day trading, which I lost about $400,000, and several other hundred thousand dollars by gambling in Vegas.”
Tortora said he had more than $500,000 in the bank when he left the hedge fund and has since spent about $400,000 in legal fees while under investigation. He pleaded guilty in January 2012 and awaits sentencing. Newman was convicted of insider trading after a trial in New York last year and sentenced to 4 1/2 years in prison. He’s free while he appeals his conviction.
“I took trips to Vegas, playing blackjack and sports betting,” Tortora said.
The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).