The FBI’s huge investigation into institutional insider trading is apparently close to a turning point – they could charge the largest number of people in history with participating in a vast insider trading “ring” “within weeks,” a person familiar with the situation told Reuters.UPDATE: The feds just raided three hedge funds tied to the scandal.
The people who the government will name is unknown at the moment, but we have an idea of more than a few people who have been implicated.
The government is trying to bust traders/people at Jennison, Wellington, MFS, Citadel, Maverick, Goldman Sachs and SAC Capital, one of the most prestigious – and “squeaky clean” – hedge funds in the world.
But so far, they only seem to have dirt on one trader at SAC who left in 2008, and none at Citadel, Jennison, Wellington, MFS, or Maverick.
The names we know are other people who are involved in the case, and who have been implicated in insider trading charges before. That their charges are being brought up again is an indication of how big the government’s investigation is – they’re trying to get everyone who receives “advantageous” information from industry experts, it seems.
New names are probably being kept private at the moment, so no one’s career is smudged unnecessarily – and so they make a big splash when the charges are announced.
The people involved so far are:
- Chip SkowronChip Skowron – a former portfolio manager at Front Point partners, a hedge fund at Morgan Stanley (that is currently spinning out of the fund and will be run independently). He has been suspended. There are more details of his implication in the Wall Street Journal.
- The Doctor – Dr. Yves M. Benhamou provided information about a company called Human Genome Sciences to Skowdown. It enabled the $1 billion fund Skowdon managed at Front Point to avoid $30 million in losses in late 2007 and early 2008. There are more details of his implication in the Wall Street Journal.
- Jonathan Hollander – a former SAC Capital Advisors analyst (who left November 2008). Prosecutors took at least two confidential statements from Hollander at some point over the last 21 months. Hollander was charged in 2006 with receiving confidential information about the status of buyout negotiations involving the Albertstons supermarket chain. The tip apparently generated $3.5 million for Hollander’s firm at the time, CR Intrinsic, a subsidiary of SAC Capital. More details about his involvement are in Reuters.
- Joseph ContorinisJoseph Contorinis – a former Jefferies Group Inc hedge fund manager who was convicted by a Federal jury of insider trading in October. More details about his involvement are in Reuters.
- The squealer / the witness – Nicos Stephanou, a former UBS banker, is one of the government’s star witnesses against Contorinis. He testified that he had provided insider information to Contorinis about corporate buyouts and testified that he had given the same information to Hollader – while he was at SAC. More details about his involvement are in Reuters.
- Ramesh Chakrapani – a Blackstone Group banker who the government charged with insider trading. The charges were later dismissed. More details about his involvement are in Reuters.
- John Kinnucan – a principal at Broadband Research LLC, who was asked to wear a wire. Kinnucan was subpoenaed on December 3rd. For more on his involvement read the Wall Street Journal. And click here.
- John Deutsch – a former Galleon Group fund manager, who knew a fund manager at Level Global, Anthony Chiasson, according to the Wall Street Journal. He received a subpoena last fall.
- Mark Adams – a former Balyasny analyst who is suspected of being a person who gave nonpublic information to a cooperating witness in the Galleon case, hedge-fund manager Steven Fortuna, according to the Wall Street Journal.
- Anthony Chiasson – a co-founder of the hedge fund Level Global (the other co-founder is David Ganek) who is said to have exchanged stock ideas with John Deutsch, according to the Wall Sreet Journal.
- Richard Choo-Beng Lee – the co-founder of Spherix Capital LLC and another SAC alumnus, has pleaded guilty and is cooperating with prosecutors in its probe of the Galleon Group hedge fund, according to BusinessWeek.
- Richard Grodin – who left SAC to start Stratix Asset Management LLC in 2004, also has received a subpoena, according to BusinessWeek.
- Don Chu – a “specialist” at PGR who was arrested on Wednesday November 24. Chu is the first *new* arrest in the scandal
- Menucher Menuchehryer – a “consultant” at Marvell, a fabless semi-conductor manufacturing firm, and a consultant to Gerson Lehrman. He may or may not have given information to Diamondback. Read more about his involvement by clicking here >
The firms that have been ensnared in the scandal where people may be named are:
- SAC Capital
- Goldman Sachs
- Diamondback Capital
- Level Global
- Loch Capital
- Wellington Management
- Janus Capital Group
- Credit Suisse
- Broadband Research
So stay on the lookout. Reuters has heard that the charges could be brought within weeks – so many more traders could be named soon.