Noah Freeman, the former SAC Capital PM who pleaded guilty last week to insider trading charges, made his then-employer, Sonar Capital Management, $22.7 million from his trades in shares of Sigma Designs, according to Bloomberg.
The Sigma scheme began in 2006 and allegedly “hinged on secret information from a source with an unnamed relative at the company.”
That source was paid $5,000 a month by Sonar and other hedge fund managers for the information, according to Bloomberg and interestingly, Freeman’s Sigma source is supposed to have given him “material, nonpublic information” well into 2009 when he was working for SAC.
Neither Sonar or SAC have been accused of wrongdoing and both firms are cooperating with the FBI.
The trades in the shares Sigma — a semiconductor maker — occurred between 2006 and 2007 while Freeman was a managing director at Sonar.
In October of 2006, the source allegedly told Freeman that Sigma had crushed analysts’ expectations for sales in Q3, weeks before the quarter ended. On that tip, Freeman “directly or indirectly caused” Sonar to purchase $15 million worth of Sigma stock on October 11 and 12, according to Bloomberg.
When the hedge fund liquidated most of its stake that December, profits on the trade were in excess of $9.5 million, with the Sigma shareprice rising by 45 per cent between the date Sonar bought and sold it’s stake.
Then in 2007, Sonar executed two more Sigma trades, which earned the hedge fund $13 million.