Former Dell Inc. supply manager Daniel DeVore avoided prison after helping prosecutors in federal insider-trading probes of fund managers and analysts, including SAC Capital Advisors LP portfolio manager Michael Steinberg.
U.S. District Judge Jed Rakoff, before imposing a sentence of time served today in Manhattan, commended DeVore on his assistance to the U.S.
The Federal Bureau of Investigation, thanks to DeVore’s cooperation, executed search warrants on several hedge funds in November 2010, the U.S. said, while some of the illegal tips he passed reached Steinberg and two other portfolio managers who were convicted of insider-trading last year.
“While the misconduct of the cooperating defendants cannot be condoned in any respect, nevertheless they have provided vital assistance to the government and have in the case of a number of them, demonstrated in a very real way their remorse and repentance and their determination to do the best they can to repair their mistakes,” Rakoff said.
Assistant U.S. Attorney Katherine Goldstein asked the judge for a sentence below the federal sentencing guidelines of 15 to 21 months in prison, citing DeVore’s cooperation.
Neither DeVore or his lawyer Johnny Sutton spoke in court.
In a Nov. 26 memo to the judge, Sutton wrote that his client deserved probation.
“Daniel DeVore is a good man who violated the law but took responsibility for his actions from the outset,” Sutton wrote. “DeVore has accepted responsibility for his actions and has been humbled by these proceedings.”
DeVore pleaded guilty in December 2010, admitting he had passed inside information to hedge-fund managers and employees while moonlighting as a paid consultant at Primary Global Research LLC. PGR, which was based in Mountain View, California, was an expert-networking firm that put investors in touch with employees at public companies.
Prosecutors said DeVore provided the government information that he had regular telephone calls from 2008 to 2009 with Jesse Tortora, a former Diamondback Capital Management LLC analyst, and Spyridon “Sam” Adondakis, a Level Global Investors LP analyst, during which he disclosed nonpublic information. Both analysts agreed to plead guilty and cooperate with the government.
The information DeVore provided the U.S. also led to the hedge fund searches, prosecutors said. The government was able to build insider-trading cases against Todd Newman, a former Diamondback fund manager and Anthony Chiasson, the co-founder of Level Global, prosecutors said. Both fund managers were convicted by a Manhattan federal jury last year of reaping more than $72 million on the tips.
The government also said Tortora shared the inside information with Steinberg’s analyst, Jon Horvath, who pleaded guilty and is cooperating. Steinberg is currently on trial in New York, charged with making more than $1.4 million based on Horvath’s illicit tips. He has pleaded not guilty.
The case is U.S. v. Nguyen, 11-cr-00032, U.S. District Court, Southern District of New York (Manhattan).