Two Victorian men have been charged with multiple counts of insider trading while acting as brokers for Citigroup Wealth Advisors in Perth, while a third man has also been charged following an investigation by the Australian Securities and Investments Commission (ASIC).
Roberto Gerald Catena, Colin Edward George Hebbard and Flemming Hood Nielsen appeared in the Perth Magistrate’s Court for allegedly possessing inside information regarding a possible takeover of Vision Systems in July and August, 2006.
Catena has been charged with 20 counts of insider trading while employed as a broker with Citigroup for advising five of his clients, including Nielson, to purchase Vision Systems shares.
Hebbard has been charged with four counts of insider trading while employed as a broker with Citigroup for advising three clients to purchase Vision Systems shares.
Nielson has been charged with 13 counts of insider trading for receiving inside information while a client of Catena and using it to purchase shares of Vision Systems through Citigroup and CommSec.
All three men were not required to enter a plea, with the matter being adjourned until 27 April.
NEW YORK (Reuters) – Two men have been charged with insider trading based on information stolen from three of the most prominent U.S. law firms specializing in mergers and acquisitions, federal prosecutors said.
Prosecutors said the information was stolen from the law firms Wilson Sonsini Goodrich Rosati; Cravath Swaine Moore LLP, and Skadden, Arps, Slate, Meagher Flom LLP, all of which had employed the defendant Matthew Kluger, a lawyer.
Kluger and co-defendant Garrett Bauer, a trader, reaped more than $32.2 million of profit from their 17-year conspiracy to invest in a variety of stocks, such as technology companies McAfee Inc, Sun Microsystems Inc and 3Com Inc, according to a complaint filed with the federal court in Newark, New Jersey.
Prosecutors said Kluger regularly stole information about anticipated corporate mergers and acquisitions from his law firms. They said he would then pass the information to an unnamed co-conspirator, who would then give it to Bauer with instructions on how many shares to buy for the three of them.
The pair invested more than $109 million in the scheme, which ran from 1994 through this March, the complaint said.
The news follows dozens of arrests since October 2009 relating to federal allegations of insider trading focused on hedge funds. One-time billionaire Raj Rajaratnam, who founded the hedge fund firm Galleon Group, is on trial in Manhattan in Wall Street’s biggest insider trading case in two decades.
Prosecutors said Bauer worked at a variety of trading firms, most recently at Lighthouse Financial Group from about June 2009 through roughly August 2010.
Lighthouse also once employed the broker Michael Kimelman, who was arrested in 2009 in connection with the hedge fund insider trading probe. Kimelman has been represented in that case by lawyers at Wilson Sonsini, court records show.
Kluger lives in Oakton, Virginia, and Bauer in New York. It is unclear whether they have lawyers for their defense.
Kluger did not immediately return a call to his home seeking comment. Bauer could not immediately be reached for comment. Wilson Sonsini did not immediately return a request for comment. Representatives of Cravath and Skadden had no immediate comment.
17 COUNTS
Prosecutors charged Kluger and Bauer with 17 counts, including 11 counts of insider trading, four counts of obstruction of justice, conspiracy to commit insider trading, and conspiracy to commit money laundering.
The case was built in part on phone wiretaps that prosecutors said show the defendants’ conspiracy.
Prosecutors said that in recent years, Kluger, Bauer and the co-conspirator would try to avoid detection by using pay phones and prepaid cellphones that they would later throw out.
They also said Bauer in late 2009 spent more than $7 million of proceeds from the scheme to buy two homes: a $6.65 million condominium on Manhattan’s Upper East Side, and an $875,000 home in Boca Raton, Florida.
According to the complaint, Kluger worked from December 2005 until this March 11 as a senior associate in Wilson Sonsini’s office in Washington, D.C., where his annual salary was about $290,000. Kluger worked at Cravath from 1994 to 1997, and at Skadden from 1998 to 2001, the complaint said.
U.S. Attorney Paul Fishman in New Jersey, and officials from the FBI and the U.S. Securities and Exchange Commission are expected to hold a press conference on the arrests later Wednesday.
The case is U.S. v. Bauer et al, U.S. District Court, District of New Jersey, No. 11-mag-03536.
(Reporting by Jonathan Stempel in New York; Additional reporting by Dena Aubin; editing by Dave Zimmerman)
Seems Google is getting information about senior employees being recruited by Twitter, in order to make counter offers, TechCrunch reported.
Google offered about $150 million to keep two senior product managers offered the chief product role at Twitter earlier this year (though Business Insider claims those numbers are “tens of millions of dollars off” — but huge numbers regardless of the exact dollar figures).
“There’s lots to say about the statement Google is making with these counteroffers. “Don’t mess with us,” comes to mind. As well as “If you’re a Google employee and you aren’t out interviewing at Facebook, Twitter or Zynga you are a moron.”
Regardless, the fact that large fortunes are being handed out to mid level technical managers is somewhat of a red flag in general. That kind of money is usually reserved for founders of companies that make it to IPO. Actually, most IPO founders make substantially less than that.” TechCrunch reported.
Meanwhile, the information Google is getting access to suggests someone at Twitter is sharing information. Twitter had a problem with leaked info a couple of years ago when their internal strategy meeting notes were made public and Google may have started taking notice.
“Much of the discussion at Twitter meetings throughout the past six months revolved around dealing with Google and Facebook. In a March 13, 2009 management meeting, for example, during a discussion of a search deal with Google, the fear is expressed that “Google would kick our ass at finding the good tweet.” But almost immediately afterwards, someone asks, “Can we do to Google what Google has done to others?”
NEW YORK (AFP) – Goldman Sachs boss Lloyd Blankfein took to the stand Wednesday, telling jurors at a high-profile insider trading trial that one of the storied bank’s ex-directors leaked sensitive company secrets.
Blankfein admitted former Goldman director Rajat Gupta broke the firm’s confidentiality rules by giving on-trial hedge fund manager Raj Rajaratnam an inside take on the bank’s possible acquisitions.
Rajaratnam, who worked for the Galleon Group, is accused by the government of creating a corrupt network of informants to rack up millions of dollars in fraudulent profits.
Blankfein appeared in a somber dark suit and blue tie before the New York court, where he heard a recording of Gupta and Rajaratnam discussing rumors that Goldman’s board “might be about to buy a commercial bank.”
“This was a big discussion at the board meeting,” Gupta said during a 2008 call, which was secretly taped.
“It was a divided discussion,” he said, adding that he would be “extremely surprised if anything is imminent.”
After being played the recording, Blankfein was asked if Gupta had broken the company’s confidentiality policies.
“Yes,” Blankfein replied.
Rajaratnam’s lawyers argued their client was just doing his job, trying to clarify information that was already circulating in the press.
Blankfein’s appearance in court as a government witness provided jurors with a rare look inside one of Wall Street’s most secretive firms.
The case is being eagerly watched by traders, as much for its personality theater as for new guidelines on what constitutes insider trading.
Earlier in the proceedings, US assistant attorney Jonathan Streeter said Rajaratnam “cheated” to benefit from illegal insider tips even as the US financial sector was in meltdown in 2008.
But defense attorney John Dowd countered that the Sri Lankan-born 53-year-old was nothing more than a brilliant entrepreneur whose Galleon hedge fund used legal, public information and “the best research in the business.”
The government case rests largely on wire-tap conversations allegedly showing Rajaratnam cultivating illegal information, and the testimony of former associates and colleagues who have already been convicted and are cooperating with the government.
Gupta, who was also a Procter Gamble director, is accused by the Securities and Exchange Commission of giving Rajaratnam “information about the quarterly earnings at both firms, as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.”
The watchdog described Gupta as “a friend and business associate of Rajaratnam.”
Gupta, a Connecticut-based business consultant and former managing director of global consulting firm McKinsey Company, was also accused of being a direct or indirect investor in at least some of Rajaratnam’s Galleon hedge funds.
NEW YORK (Reuters) – Galleon hedge fund founder Raj Rajaratnam, the central figure in the biggest U.S. insider trading case in a generation, went to trial on Tuesday in a showdown with prosecutors that will feature wiretap evidence and the testimony of former friends and associates.
Onetime billionaire Rajaratnam, 53, was mobbed by photographers and TV crews when he stepped from a black suburban SUV and walked into Manhattan federal court. Dressed in a brown coat and a suit, he was escorted by one of his lawyers.
He sipped black coffee in the courthouse cafeteria, declining to comment to reporters. He then went to the courtroom where about 150 potential jurors were to be questioned by U.S. District Judge Richard Holwell.
Opening statements will start once the 12-member panel is in place for a trial expected to last up to two months.
Rajaratnam is the former head of Galleon Group, which once managed $7 billion. He could face a 20-year prison sentence if convicted on the most serious charge of securities fraud.
Since arresting Rajaratnam in October 2009 and announcing criminal charges against 26 former traders, executives and lawyers, the U.S. government has pressed ahead with what it calls the biggest probe of insider trading in the $1.9 trillion hedge fund industry.
Prosecutors allege Sri Lankan-born Rajaratnam made $45 million in illicit profits through tips from former friends and associates. Nineteen people have pleaded guilty in the case, which stands apart from past insider trading probes because of the government’s wide-scale use of phone taps.
A questionnaire asks potential jurors more than 50 questions aimed at weeding out potential bias against the financial industry and concerns about the economic crisis.
The case “does not have anything to do with the recession or who is to blame for the financial problems we face,” the questionnaire reads.
It goes on to ask, “Does the fact that the case involves the financial industry, Wall Street executives, hedge funds, mutual funds and the like, make it difficult for anyone to render a verdict?”
It is not known whether Rajaratnam will testify in his own defense after the jury has heard hours of tapes and testimony from as many as six cooperating witnesses. Prosecutors say they could present up to 173 recordings of telephone conversations.
Among those who could be called by the government to testify is Lloyd Blankfein, chief of Goldman Sachs Group Inc., according to published reports.
Prosecutors and regulators have accused former Goldman board member Rajat Gupta of leaking information about the bank to his friend Rajaratnam, but Gupta has not been criminally charged.
Rajaratnam’s chief defense lawyer, John Dowd, has fought hard for his wealthy client, arguing that prosecutors have broadened the definition of insider trading. A money manager’s liberty should not be at risk because he trades on a stock while knowing something about the company, Dowd argues.
He also fought, unsuccessfully, to suppress the FBI’s secretly recorded phone conversations from trial.
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Additional reporting by Basil Katz)
(Reporting by Grant McCool, editing by Dave Zimmerman)
