Anthony Chiasson, the co-founder of hedge fund Level
Global Investors, was sentenced on insider trading charges this week to serve
78 months in prison. U.S. v. Newman, 1-12-cr-00121 (S.D.N.Y.). Mr.
Chiasson was convicted along with co-defendant Todd Newman, a portfolio manager
at Diamondback Capital Management LLC, by a jury last December. Mr. Newman has
been sentenced to serve 54 months in prison.
The cases some called the Dell insider trading cases,
centered on a ring which gathered inside information from company employees at
Dell Inc. and NVIDIA Corporation. Mr. Chaisson's research analyst, Sam
Adondakis, along with Jesse Tortora, Jon Horvath and Danny Kuo, who were
research analysts at other firms, obtained and exchanged the information. It
was then furnished to the portfolio managers at their respective firms who
In 2008 and 2009 Mr. Chiasson received inside information
from Mr. Adondakis related to Dell's quarterly earnings. The information traced
to Mr. Newman's analyst, Jesse Tortora and Sandy Goyal, another analyst, and
ultimately to a Dell employee. Mr. Chiasson received inside information
regarding the May and August 2008 Dell earnings announcements. In each instance
he caused Level Global to trade, reaping profits of about $58.5 million.
Documents were created in an effort to conceal the predicate for the trades.
In 2009 Mr. Chiasson obtained inside information
regarding the earnings of NVIDIA from Mr. Adonkaakis. He in turn had obtained
the information from analyst Danny Kuo who worked for another investment firm.
The information related to an up coming May 2009 earnings release. As a result
of the trades Level Global had trading profits of about $10 million.
Messrs. Horvath and Kuo each pleaded guilty to one count
of conspiracy to commit securities fraud and two counts of securities fraud
last year. Messrs. Tortora and Adondakis each pleaded guilty to one count of
conspiracy to commit securities fraud and one count of securities fraud. All
four men are awaiting sentencing. The SEC has a parallel case pending. SEC
v. Adondakis, Civil Action No. (S12-cv-0409 (S.D.N.Y.).
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For more commentary on developing securities
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