NEW YORK/BOSTON (Reuters)-a new round of insider trading indictment includes hedge funds, be in the works, to judge by some unusual Name-dropping during two last guilty pleas in the protracted probe.
Two previous research consultants told a Manhattan federal judge that they gave confidential company information to traders on the three medium-sized hedge funds: STG capital, G-core capital and Kingdom Ridge capital. STG and G-Core closed both late last year after a string of FBI raids and lawsuits on hedge funds related to trade missions.
None of the three funds has been accused of wrongdoing. Publication of their names suggest, however, on a road map that prosecutors may qualify, as they continue to pursue allegations of illicit trafficking with $ 2 trillion hedge fund industry.
Naming of economic agents could be intended to put pressure on them or others to plead guilty or to submit information, say legal experts. Office of Manhattan U.S. Attorney Preet Bharara has recently won a string of insider trading cases, including the conviction in May of single hedge fund billionaire Raj Rajaratnam, and secured many guilty pleas in trade missions.
"This is the use of a plea allocution to signal the ship sailing and to obtain the named persons to cooperate in order to make others," Daniel Richman, professor at Columbia Law School, said of airing of the producers ' names.
RAISING EYEBROWS
Consultants Mark Longoria and Walter Shimoon, who both worked for "experts networking" company's primary global research, have both acknowledged they left the hedge fund traders with tips about technology company earnings and sales trends. Longoria pleaded guilty on June 30, Shimoon on July 5.
Former prosecutors say it is rare for defendants pleading guilty to be so open about identify others who may have been used for crime, but has been accused of them.
In fact the official procedure manual for U.S. Attorney says "it is not generally appropriate" for a Prosecutor to identify a zero rate "wrongdoer" during a plea proceeding. The manual also says that a Prosecutor should not be "causes a defendant" pleading guilty to name that person either.
Ellen Davis, a spokeswoman for Bharara, declined to comment.
Both Longoria and submitted their pleas before Shimoon United States District Judge Jed Rakoff, who has a reputation to make tough issues and operates the defendants to be as accommodating as possible during the plea hearing.
The name Kingdom Ridge capital was provided by a Prosecutor in response to a question by Rakoff as Shimoon seemed to have had problems with that answer. The judge's questions may have inadvertently help prosecutors to obtain the names of traders in the court records that may have otherwise been secret.
"It is the best possible world where the Prosecutor to be named but is hamstrung by the rules," the former Brooklyn, New York, Federal Prosecutor Winston Chan, who is not involved in the case, said if the publication of the names. Chan is now a lawyer at the law firm Gibson, Dunn & Crutcher/LLP.
A jury in June sentenced Winifred Jiau, another former primary global consultancy, providing traders with inside tips. Earlier this year, prosecutors secured the required bases from two former portfolio managers on the trader's Steven Cohen hedge fund SAC capital advisors, along with a number of other former primary global consultants.
Prosecutors have not made any allegations of improper trade against Cohen or someone currently associated with his Stamford, Connecticut-based fund.
Prosecutors have much material to go through as they investigate. In court filings, they talked defense lawyers they have raised more than 1 800 audio tapes, and e-mail from 100 persons in their probe to the expert network industry, firms that specialize in matching hedge funds with industry consultants. Also, more than two dozen hedge funds have received lawsuits, sources said.
According to testimony from an FBI agent filed on Tuesday, received government approval in December 2008 to record telephone conversations by Richard Grodin and Dipak Patel, both former portfolio managers SAC capital. Neither has been charged criminally. They could not be reached for comment on Wednesday.
EXPERTS WITH LARGE NETWORKS
Longoria, a former Advanced Micro Devices Inc.
He also said that he gave information to the "Gurinder by G-core." G-Core, a fund set up by Ian Goodman, a former top traders with SAC capital, also concluded last year. Goodman's first hires at the G-Core was traders Gurinder Kalra.
Calls to STG capital and G-Core was not returned.
In January, told Reuters that his company's glass relationship with primary global did not play any part in his decision to shutter the Fund. He did not respond to e-mail this week seeking comment.
Goodman, once a top trader of Cohen's SAC capital, launched G-Core 2008 with around 200 million dollars from investors.
During his undergraduate says Shimoon, a former employee, Flextronics he had shared information with a trader named "Nick" at White Plains, New York hedge fund.
Under prodding by Rakoff, American identified Prosecutor Antonia Apps trader Nicholas Caputo, employed by UK Ridge capital, another hedge fund formed by people who had previously worked at SAC capital.
Glenn Colton, a lawyer for Kingdom Ridge, said hedge fund was surprised Shimoons basis.
"There was simply no reason for an innocent party UK Ridge named on an unfair and misleading way," said Colton.
Shimoon also said he worked for John Kinnucan broadband research. Late last year, rejected the Kinnucan Overtures by FBI agents to wear a wire and help with the case, the insider-trading. Kinnucan has told Reuters that he did anything wrong and that he collected on technology companies on marketing trends and new products were eligible.
(Reporting by Svea Herbst-Bayliss and Basil Katz, editing by Matthew Goldstein, Martha Graybow, and Matthew Lewis)
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