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Two people who once worked for billionaire trader Steven A. Cohen's SAC Capital Advisers were charged with insider trading, drawing the $12 billion hedge fund firm further into a high-profile U.S. investigation.
Prosecutors on Tuesday accused the two former employees, among four new defendants charged with insider trading, with receiving corporate secrets while working at SAC. The firm itself has not been charged with any wrongdoing.
The government has been investigating current and former SAC employees, sources have told Reuters, since prosecutors announced a huge insider trading case involving Galleon Group hedge fund founder Raj Rajaratnam in October 2009.
A number of SAC's former analysts and traders were questioned over the course of the Galleon investigation, but none had been charged in that case for their activities at the Stamford, Connecticut-based fund.
The latest charges were announced by federal prosecutors investigating ties between hedge funds and consultants for so-called expert networking firms -- businesses that match hedge funds seeking information with industry consultants.
One of the former SAC employees, Noah Freeman, agreed to plead guilty and is cooperating with the investigation, prosecutors announced Tuesday. Freeman's lawyer, Ben Rosenberg of Dechert LLP, did not return calls seeking comment.
The other former SAC employee, Donald Longueuil, was arrested Tuesday morning at his Manhattan home on charges of conspiracy and obstruction of justice.
During a brief appearance in U.S. District Court in New York, a magistrate judge approved Longueuil's release on $1.5 million bond. His lawyer, Craig Carpenito of Alston & Bird LLP, declined to comment.
SAC said it is cooperating with the government probe. A spokesman for Cohen said the high-profile hedge fund manager was "outraged by the alleged actions of two former employees" and noted SAC had fired both Freeman and Longueuil in 2010.
The government announced charges on Tuesday against two others: hedge fund manager Samir Barai and an analyst who worked at his fund, Jason Pflaum.
Barai, a former Citigroup hedge fund manager who left to launch Barai Capital Management, surrendered to FBI agents. A judge permitted his release on $1 million bond. Barai's lawyer, Evan Barr of Steptoe & Johnson LLP, declined to comment.
Pflaum has agreed to plead guilty and like Freeman is cooperating with the investigation. Pflaum's lawyer, Michael Grudberg of Stillman, Friedman and Shechtman PC, declined to comment.
Since November, prosecutors have charged more than a dozen people in this newest crackdown on insider trading in the $1.9 trillion hedge fund industry.
Tuesday's charges mark the expansion of the probe beyond expert networking firm consultants and employees to hedge fund employees suspected of receiving secret tips on technology stocks.
Prosecutors on Tuesday accused the two former employees, among four new defendants charged with insider trading, with receiving corporate secrets while working at SAC. The firm itself has not been charged with any wrongdoing.
The government has been investigating current and former SAC employees, sources have told Reuters, since prosecutors announced a huge insider trading case involving Galleon Group hedge fund founder Raj Rajaratnam in October 2009.
A number of SAC's former analysts and traders were questioned over the course of the Galleon investigation, but none had been charged in that case for their activities at the Stamford, Connecticut-based fund.
The latest charges were announced by federal prosecutors investigating ties between hedge funds and consultants for so-called expert networking firms -- businesses that match hedge funds seeking information with industry consultants.
One of the former SAC employees, Noah Freeman, agreed to plead guilty and is cooperating with the investigation, prosecutors announced Tuesday. Freeman's lawyer, Ben Rosenberg of Dechert LLP, did not return calls seeking comment.
The other former SAC employee, Donald Longueuil, was arrested Tuesday morning at his Manhattan home on charges of conspiracy and obstruction of justice.
During a brief appearance in U.S. District Court in New York, a magistrate judge approved Longueuil's release on $1.5 million bond. His lawyer, Craig Carpenito of Alston & Bird LLP, declined to comment.
SAC said it is cooperating with the government probe. A spokesman for Cohen said the high-profile hedge fund manager was "outraged by the alleged actions of two former employees" and noted SAC had fired both Freeman and Longueuil in 2010.
The government announced charges on Tuesday against two others: hedge fund manager Samir Barai and an analyst who worked at his fund, Jason Pflaum.
Barai, a former Citigroup hedge fund manager who left to launch Barai Capital Management, surrendered to FBI agents. A judge permitted his release on $1 million bond. Barai's lawyer, Evan Barr of Steptoe & Johnson LLP, declined to comment.
Pflaum has agreed to plead guilty and like Freeman is cooperating with the investigation. Pflaum's lawyer, Michael Grudberg of Stillman, Friedman and Shechtman PC, declined to comment.
Since November, prosecutors have charged more than a dozen people in this newest crackdown on insider trading in the $1.9 trillion hedge fund industry.
Tuesday's charges mark the expansion of the probe beyond expert networking firm consultants and employees to hedge fund employees suspected of receiving secret tips on technology stocks.
