capital market case
TRANSCRIPT
-
7/29/2019 Capital Market Case
1/13
CAPITAL MARKET
CASE
DELLS INSIDER TRADING CASE
-
7/29/2019 Capital Market Case
2/13
-
7/29/2019 Capital Market Case
3/13
This case involves insider trading by members
of a network of closely associated hedge fundtraders who illegally obtained material nonpublicinformation concerning public companies Dell,Inc. exchanged that information with others, and
reaped massive profits from trading on thatinformation.
FRAUD.docx
http://localhost/var/www/apps/conversion/tmp/scratch_4/FRAUD.docxhttp://localhost/var/www/apps/conversion/tmp/scratch_4/FRAUD.docx -
7/29/2019 Capital Market Case
4/13
CHRONOLOGY
DELLS INSIDER
SANDEEP GOYAL
During at least 2008, a Dell insider (the "Dell Insider") passed materialnonpublic information regarding Dell to Goyal, an analyst at InvestmentAdviser A who previously worked at Dell. This material nonpublicinformation included quarterly earnings information and otherperformance data regarding Dell that Goyal obtained in advance of
Dell's quarterly earnings announcements
-
7/29/2019 Capital Market Case
5/13
Newman used theinside information hereceived from Tortora
to trade Dell securitieson behalf of hedgefunds managed byDiamondback, reapingapproximately $3.8
million in profits forthose funds during2008.
SANDEEP GOYAL
JESSE TORTORA
TODD NEWMAN
DIAMONDBLACK CAPITALMANAGEMENT, LLC
-
7/29/2019 Capital Market Case
6/13
Tortora and Newman paid Goyal for providingmaterial nonpublic information regarding Dell by
arranging for Diamondback to direct soft dollarpayments totaling at least $175,000 to a
brokerage account in the name of a nominee ofGoyal. These payments were arranged by Tortora
and approved by Newman.
-
7/29/2019 Capital Market Case
7/13
"Soft dollars" are created when an investmentfirm causes its trading activity to be directedthrough a designated broker-dealer, and, in
return, the broker-dealer credits the
investment firm with a portion of thecommissions or fees from the executed
trading activity. These credits can then beused to pay for goods and services consumed
by the investment firm, such as third-party
-
7/29/2019 Capital Market Case
8/13
JESSETORTORA
JONHOVART
DANNY KUO SPYRIDONADONDAKIS
Tortora also passed the Dell inside information thathe received from Goyal to at least three individuals
at other investment adviser firms with whom
Tortora regularly shared information: (i) Adondakis,
(ii) Horvath, and (iii) Kuo
-
7/29/2019 Capital Market Case
9/13
SPYRIDON ADONDAKIS
After receiving the Dellinformation from Tortora,
Adondakis provided the
information to defendantChiasson, one of Level Global'stwo founding partners.
Adondakis informed Chiasson
that the Dell information hadoriginated from a source insideDell. Chiasson caused LevelGlobal's hedge funds to tradeDell securities based on the tips
he received from Adondakis,thereby causing Level Global'shedge funds to reap profitstotaling approximately $57
million in 2008.
ANTHONY CHIASSON
-
7/29/2019 Capital Market Case
10/13
JOHNHOVART
Communicated portfoliomanager at Hedge FundA then executed trades
in Dell securities .Those trades resulted in
approximately $1.4million in profits forHedge Fund A in 2008.
DANNY KUO
Directly or indirectly causeda hedge fund managed byInvestment Adviser B toexecute trades in Dellsecurities and which
resulted in over $180,000
in profits and lossesavoided for Investment
Adviser B's hedge fund in2008.
-
7/29/2019 Capital Market Case
11/13
-
7/29/2019 Capital Market Case
12/13
COURT DECISION
The SECs complaint charges each of the defendants withviolations of Section 17(a) of the Securities Act of 1933, andSection 10(b) of the Securities Exchange Act of 1934 andRule 10b-5 thereunder, and, additionally, charges Goyal, Tortora,Newman, Adondakis, Chiasson, Horvath and Kuo with aiding and
abetting others violations of Section 10(b) of the Exchange Actand Rule 10b-5 thereunder. The SECs complaint seeks a final
judgment ordering the defendants to disgorge their ill-gottengains plus prejudgment interest, ordering them to pay
financial penalties, and permanently enjoining them fromfuture violations of these provisions of the federal securities
-
7/29/2019 Capital Market Case
13/13