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From: Dale Baker	4/8/2005 12:30:54 AM
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Hedge-Fund Manager Pleads Guilty In Elgindy Insider-Trading Case By CAROL S. REMOND DOW JONES NEWSWIRES April 7, 2005 5:53 p.m. NEW YORK -- Hedge-fund manager Jonathan Daws pleaded guilty to conspiracy to commit insider trading. Mr. Daws was charged as part of the criminal case against short seller Anthony Elgindy. Mr. Elgindy was found guilty of using confidential information gathered from government databases to profit from selling short the stocks of small companies and extorting discounted shares from them. Under federal sentencing guidelines, Mr. Daws could spend between 18 months to 24 months in jail for his guilty plea. Sentencing is scheduled for Aug.18. Two others charged in the case are scheduled to be tried separately later this year. Mr. Elgindy and former Federal Bureau of Investigation special agent Jeffrey Royer were found guilty of racketeering conspiracy and securities fraud in January. They are awaiting sentencing. Messrs. Elgindy and Royer were charged in May 2002 in the U.S. District Court for the Eastern District of New York with securities fraud, extortion and obstruction of justice. Mr. Daws , who at the time was a manager at hedge-fund Gryphon Partners, was charged a year later in a superseding indictment. In his allocution to Judge Raymond Dearie, Mr. Daws said that between December 1999 and May 2002, he and others at Gryphon were members of Mr. Elgindy's investing Web site. Mr. Daws said he and others at Gryphon received information from Mr. Elgindy which they knew was confidential and on which they traded. Mr. Daws said he knew some of the information he received came from then-FBI special agent Mr. Royer. In the case against Mr. Elgindy and others, the government alleged that Mr. Royer was a corrupt federal agent who misappropriated confidential information from FBI computers, which he shared with Mr. Elgindy and others. Three defendants, Derrick Cleveland, Robert Hansen and Kent Terrell, have pleaded guilty and are cooperating with the government. According to the indictment, Mr. Elgindy used a private investing Web site to share some of the information he gained from Mr. Royer and other law-enforcement officers with site members. The government alleged that Mr. Elgindy organized site members in order to maximize the impact of the release of negative information on the stock price of targeted companies. Short sellers sell borrowed shares in the anticipation that they will profit when the price of these shares goes down. Write to Carol S. Remond at carol.remond@dowjones.com

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