(Bloomberg News) Seven people were charged in Manhattan federal court with counts including securities fraud and conspiracy as part of a five-year insider trading investigation by the FBI and the Justice Department.
Among those charged are Level Global Investors LP co- founder Anthony Chiasson, who along with three other suspects was taken into custody today, according to two people familiar with the matter. Todd Newman, formerly of Diamondback Capital Management LLC, was arrested in the Boston area by the Federal Bureau of Investigation, and Jon Horvath was detained in New York, according to one of the people, who asked not to be identified because they weren't authorized to speak publicly. Chiasson turned himself in, the second person said.
Also charged today were Danny Kuo, who was arrested, and Sandeep Goyal, according to court filings. The two other defendants weren't immediately identified by the government. Manhattan U.S. Attorney Preet Bharara is set to hold a press conference this afternoon. The trades at issue in the new charges included securities of Nvidia Inc. and Dell Inc., according to the complaint filed today against Newman, Chiasson, Horvath and Kuo by FBI Special Agent David Makol.
Newman caused a hedge fund "to execute securities transactions in Dell based on material, nonpublic information Newman obtained from a co-conspirator," according to the complaint. Chiasson caused a hedge fund "to execute securities transactions in Dell based on material non-public information Chiasson obtained from a co-conspirator."
The probe has resulted in insider trading charges against at least 56 people. More than 50 have pleaded guilty or been convicted after trial since 2009, including Galleon Group LLC co-founder Raj Rajaratnam, who was found guilty in May and is serving 11 years in prison, the longest ever for insider trading.
When FBI agents this morning sought to arrest Chiasson at his Manhattan home, they discovered that he had already left, said one of the people familiar with the matter. FBI agents encountered Wall Street Journal reporters at the building, the person said. Adrienne Senatore, a spokeswoman for the FBI's New York office, declined to comment on the arrests or Chiasson's absence from his home.
U.S. Attorney Spokeswoman
Ellen Davis, a spokeswoman for Bharara, declined to comment on the attempted arrest. Ashley Huston, a spokeswoman for News Corp.'s Dow Jones & Co., publisher of the Wall Street Journal, didn't immediately respond to a request for comment.
On Nov. 22, 2010, FBI agents from New York and Boston executed search warrants at the offices of Level Global and Diamondback, hedge funds founded by former employees of SAC Capital Advisors LP.
Horvath formerly worked at Stamford, Connecticut-based SAC Capital Advisors, according to a person familiar with the matter, who asked not to be identified because he wasn't authorized to speak publicly. A representative of SAC couldn't be immediately reached for comment.
Level Global told clients last February that it was shutting down -- eight years after David Ganek and Chiasson founded the hedge fund -- because of the U.S. probe.
Steven Goldberg, a spokesman for New York-based Level Global, didn't return a call seeking comment on the arrests. Steve Bruce, a spokesman for Stamford-based Diamondback, declined to comment immediately.
The case is U.S. v. Newman, 12-00124, U.S. District Court for the Southern District of New York (Manhattan)