The jury has been selected for the trial of Anthony Chiasson and Todd Newman according to an article in the Dealbook section of the New York Times. Chiasson co-founded Level Global Investors and Newman was a portfolio manager at Diamondback Capital Management. Their charge- being part of a $68 million conspiracy that traded massive amounts of Dell and computer chip maker Nvidia shares based off an insider tip, right before an announcement of the negative value of the shares was released.
The article discusses a greater conspiracy than just Chiasson and Newman. Six other traders have already pleaded guilty.One of the other traders worked for SAC Capital Advisors; Level Global and Diamondback were both started by former employees of SAC Capital Advisors. Prosecutors and investors alike are interested to see what information this trial will bring regarding the trading strategies and practices of SAC Capital Advisors.
So far, the investigation into the Wall Street insider trading has lead to sixty-nine convictions. The majority of the defendants have pleaded guilty; of the eight defendants that have gone to trial, all were found guilty. The conspiracy spanned throughout SAC Capital, Level Global and Diamondback; however, the investigation is not limited to those three companies. Rajat Gupta of Golman Sachs and Sandeep Goyal of Dell have been sentenced to jail time due to their active roles in this conspiracy.
An earlier article in the Dealbook explains more about the actual conspiracy. The men charged passed insider information through a "circle of friends" that were mainly hedge fund managers, the article explained. These men then shorted shares of Dell and Nvidia before a negative earnings announcement was due to be released. The hedge fund and portfolio managers involved in this conspiracy had a duty to their investors as well as to their employers to not use insider information. The negative value of the shares of Dell and Nvidia had not yet been made to the public when they acted upon the tip, thus making their trades illegal insider trading. The many of the ties between the insider trading and the participants of the conspiracy, which produced great gains for the managers and great losses for the individual investors, have been traced to SAC Capital Advisors.