19/01/2012 Author: David Beattie

Seven charged as SEC makes latest swoop on insider trading

Two multi-billion dollar US hedge fund advisory firms and seven fund managers and analysts involved in an alleged $78m insider trading scheme were Wednesday charged by the country’s Security and Exchange Commission, according to an SEC statement.

The charges relate to trading on the back of non-public information about computer giant Dell’s quarterly earnings and similar data about the Florida-based computer firm Nvidia Corporation.

The charges stem from the SEC’s ongoing investigation into the trading activities of hedge funds, said the statement.

The SEC alleges that a network of closely associated hedge funds traders at Stamford-based Diamondback Capital Management and Greenwich-based Level Global Partners illegally obtained non-public information about the two companies.

“These are not low-level employees succumbing to temptation by seizing a chance opportunity,” said SEC enforcement division director Robert Khuzam.

“These are sophisticated players who built a corrupt network to systemically and methodically obtain and exploit illegal inside information again and again at the expense of law-abiding investors and the integrity of the markets,” he added.

Documents filed in the federal court in Manhattan show illicit gains on the Dell insider trades exceeded $62.3m, while a figure in excess of $15.7m was derived from similar trades at Nvidia.