Wellington, Janus, SAC Said to Get Document Requests in U.S. Trading Probe
SAC Capital Advisors LP and Wellington Management Co. received requests for documents from federal investigators looking into insider trading, according to two people familiar with the matter. Janus Capital Group Inc. also was asked for information.
Wellington said on an internal conference call yesterday that it’s conducting a review of records, and that it didn’t engage in illegal trading, according to one of the people, who asked not to be named because the Boston-based firm is private. Janus, based in Denver, said today it received a request for “general information and intends to cooperate fully with that inquiry.”
Federal officials, led by U.S. Attorney Preet Bharara in Manhattan, are investigating whether money managers may have profited from insider trading, or buying and selling based on material, nonpublic information. The offices of hedge funds Level Global Investors LP and Diamondback Capital Management LLC, run by former traders of Steven A. Cohen’s SAC, were searched yesterday by agents from the Federal Bureau of Investigation.
“This is going to go beyond hedge funds,” said Stewart Massey, chief investment officer at Massey, Quick & Co. in Morristown, New Jersey, which manages $2 billion on behalf of endowments, foundations and wealthy families. “This is going to involve traditional money managers also.”
$12 Billion in Assets
No allegation of wrongdoing has been made against Stamford, Connecticut-based SAC, which manages $12 billion, or Janus and Wellington.
Jonathan Gasthalter, a spokesman for SAC, declined to comment.
In a call today, Wellington officials disclosed the document request, without specifying what kind of information investigators are seeking, the person said. Sara Lou Sherman, a spokeswoman for Wellington, declined to comment.
Janus “maintains rigorous compliance procedures” and “has confidence in the integrity of its processes and its people,” Shelley Peterson, a spokeswoman for the firm, said in the e-mailed statement.
Janus, Wellington and mutual-fund company MFS Investment Management in Boston were clients of Broadband Research LLC, a Portland-based research firm that was visited by FBI agents last month, the Wall Street Journal reported on Nov. 20.
John Reilly, a spokesman for MFS, declined to comment.
Wellington, a closely held company that traces its roots to an investment firm formed in 1928, is led by Chief Executive Officer Perry Traquina. The firm manages about $598 billion in assets in mutual funds and separate accounts for institutional investors, such as endowments and pension funds, and mutual funds for investment firms including Vanguard Group Inc.
The $52 billion Vanguard Wellington Fund gained an annual average of 5 percent in the past five years, beating 89 percent of rival funds, according to data compiled by Bloomberg.
Wellington serves as an adviser to 19 Vanguard funds with about $175 billion in assets, Linda Wolohan, a spokeswoman for Valley Forge, Pennsylvania-based Vanguard, said in an e-mailed statement.
“Vanguard has a longstanding relationship with Wellington and remains fully confident in and committed to that relationship and the investment-advisory services provided by the firm on behalf of our client,” Wolohan said.
SAC hadn’t been subpoenaed as of Nov. 4 in relation to the government’s probe of insider trading at the Galleon Group hedge fund, the firm’s lawyer, Martin Klotz, said that day. Klotz had been summoned as a government witness in the criminal trial of Milton Balkany, a Brooklyn, New York, rabbi who was convicted six days later of trying to extort $4 million from SAC.
Asked by a prosecutor whether “SAC or Mr. Cohen himself was under investigation in the Galleon case,” Klotz said no. “We did not receive subpoenas,” Klotz testified in Manhattan federal court. “We did not receive inquiries from anybody in the government in connection with that investigation.”
Jessie Erwin, a spokeswoman for Bharara’s office, and Richard Kolko, a spokesman for the FBI, declined to comment.
Yesterday’s raids follow testimony by a former UBS AG investment banker at a criminal trial in September that he “provided confidential information” to a friend who worked as an analyst at SAC.
Fourteen people have pleaded guilty in the Galleon Group insider trading case brought by Bharara last year as he initiated the crackdown, and at least nine others have been charged. Raj Rajaratnam, the founder of Galleon, has denied wrongdoing and is scheduled to go on trial next year.
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