New York: US federal prosecutors on Tuesday announced insider-trading charges against four hedge-fund employees, part of an investigation that involved FBI agents using wire taps to collect incriminating information.
Three of the men - Samir Barai, 39, Donald Longueuil, 34, and Noah Freeman, 35 - were hedge-fund portfolio managers while the fourth - Jason Pflaum, 37, - was a hedge fund technology analyst, the Justice Department said in a statement.
The men worked at different hedge funds but allegedly shared private insider information ‘about at least six publicly-traded companies for the purpose of executing securities transactions that realised millions of dollars in illegal profits,’ the statement said.
US media reported that Freeman and Longueuil had recently worked at SAC Capital Advisers, a hedge fund operated by billionaire Steve Cohen. SAC said it is helping with the investigation.
Barai and Longueuil also face obstruction of justice charges for attempting to destroy evidence ‘after reading media reports about the FBI’s insider trading investigation,’ the Justice Department said.
“So far, 12 people have been charge in connection with the investigation and four have pled guilty, but we are far from finished,” said Preet Bharara, the US attorney for the southern district of New York.
"Together with our law enforcement partners at the FBI, we intend to continue being as systematic and methodical in attacking insider trading as we allege today's defendants were in practicing it," Bharara said.
Bharara described the complaint as ‘a sad chronicle not only of criminal conduct but also its brazen cover-up.’
"When you are paying insiders for earnings data before it's announced, that isn't 'research' -- that's cheating," said FBI Assistant Director-in-Charge Janice Fedarcyk, as she made the announcement to reporters along with Bharara.
"For all their presumed sophistication, the defendants lacked a mobster's instinct for conversational discretion," Fedarcyk said.
Pflaum and Freeman previously pled guilty to conspiracy to commit securities fraud and securities fraud, and face up to 25 years in prison.