Hedge fund employees plead not guilty in insider trading case

A group of current and former hedge fund employees pleaded not guilty Tuesday to charges they engaged in an alleged “criminal club” that made $61.8 million through improper trades based on inside information.

An indictment, returned by a federal grand jury in Manhattan last week, broadened the charges against two of the defendants: Todd Newman, a former portfolio manager with hedge-fund firm Diamondback Capital Management, and Anthony Chiasson, a former hedge-fund manager at Level Global Investors.

Newman and Chiasson, as well as Jon Horvath, a technology analyst with SAC Capital Advisors LP’s Sigma Capital Management division in Manhattan, and Danny Kuo, a former vice president and technology-fund manager with Whittier Trust Co. in South Pasadena, Calif., have been charged with conspiracy and securities fraud. They were originally charged in the case last month. They all entered not-guilty pleas to the charges at a hearing in Manhattan federal court on Tuesday.

Three other former analysts have already pleaded guilty to criminal charges in the alleged scheme and agreed to cooperate in the investigation.

On Tuesday, Assistant US Attorney Antonia Apps said prosecutors plan to turn over to the defense a number of recorded telephone calls with the defendants, including wiretaps.

Apps said prosecutors have several recorded phone calls made by cooperating witnesses in the case with Newman, Horvath and Kuo. Prosecutors also plan to turn over wiretaps that capture conversations between Chiasson and John Kinnucan, an independent research analyst who has become embroiled in the probe, Apps said. The wiretaps were of Kinnucan’s cellular phone, Apps said.

Kinnucan hasn’t been arrested or charged in the probe. He sent an email to clients in October 2010, saying that he had been approached by the FBI and asked to cooperate in the probe.

To read more, go to The Wall Street Journal