David Ganek, the founder of now-closed hedge fund Level Global, said today’s court decision to toss the insider trading convictions of two hedge fund managers is “vindication,” but a lot of folks still lost their reputations and jobs.
“For the dozens of my high-integrity colleagues at Level Global who lost their jobs and their reputations because the FBI improperly raided our firm in this now-discredited fishing expedition, today’s legal vindication is a reminder how prosecutorial recklessness has real impact on real people,” Ganek, who now runs Apocalypse 22, said in a statement.
On Wednesday, the United States Court of Appeals for the Second Circuit reversed the insider-trading convictions of hedge-fund managers Todd Newman and Anthony Chiasson.
It was a really high-profile case.
Newman, an ex-Diamondback Capital portfolio manager, Chiasson, the cofounder of Level Global, were codefendants accused of trading on inside information in Dell and Nvidia stocks. The two hedge-funders were arrested in January 2012 and convicted in May 2013.
Level Global, which Chiasson and Ganek cofounded in 2003, was a Connecticut-based hedge fund that once managed around $US4 billion in assets. The firm became a casualty of the government’s massive insider trading crackdown.
In November 2010, the FBI raided Level Global and Diamondback. One source present at the Level Global office during the raid described it to Business Insider as “surreal.”
Following that raid, Level Global closed its doors in 2011 and roughly 65 of the fund’s employees lost their jobs.
In 2013, Level Global agreed to pay the Securities and Exchange Commission $US20.5 million to settle insider trading charges.
Today’s court decision is seen as “bittersweet,” a former Level Global employee tells us.
“The whole thing today is bittersweet. I’m happy for Anthony [Chiasson]. He’s a great guy, a good dad and husband and friend, too.”
“This exoneration is good for Anthony,” the source said. “But we’ll never be able to get our reputations back. I think that’s clear.”
The source explained that it’s been difficult for many of the former employees to find a job, or a position equal to the one they had before at Level Global.
“A lot of people got hurt. My life had been turned upside down. Reputations are just destroyed. You can’t get a job.”
So even though the charges have been reversed, the saga isn’t over for people who worked at Level Global. It may never be over.