SEC’s Latest Insider Trading Charges Involve Dealings In Dell, Nvidia
Wednesday offered the latest rumble in ongoing efforts to crack down on insider trading, with fresh civil and criminal charges against traders alleged to have used material nonpublic information to take positions ahead of corporate earnings.
On the heels of a successful conviction of Galleon Group founder Raj Rajaratnam for insider trading in stocks including Goldman Sachsand Procter & Gamble, the SEC and the U.S. Attorney for the Southern District of New York announced charges against seven individuals, including traders and analysts from hedge funds Diamondback Capital Management and Level Global Investors.
The complaints allege that analyst Sandeep Goyal obtained Dell earnings information from a company insider in 2008 before the results were made public, then tipped off Diamondback analyst Jesse Tortora, who passed the news along to others who traded on the information.
“These are not low-level employees succumbing to temptation by seizing a chance opportunity. These are sophisticated players who built a corrupt network to systematically and methodically obtain and exploit illegal inside information again and again at the expense of law-abiding investors and the integrity of the markets,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
In addition to the Dell trades, which the SEC says accounted for more than $62.3 million in illicit gains, other insider trades in chipmaker Nvidia produced $15.7 million in ill-gotten proceeds.