Hedgies exposed daily.
S2’s Fortuna Told Judge ‘Several’ People at Funds Gave Tips
By David Glovin and Linda Sandler
bloomberg.com
Nov. 10 (Bloomberg) -- Steven Fortuna, a hedge-fund manager who pleaded guilty and is helping prosecutors in an insider- trading probe of the industry, said he was tipped by “several individuals” at other funds, according to a court transcript.
Fortuna, the co-founder and former managing director of the hedge fund S2 Capital Management, while pleading guilty on Oct. 20, elaborated on prosecutors’ statements in court papers that he received multiple tips from several people, none of whom he identified. The transcript of his plea in federal court in New York was made public yesterday.
“My criminal conduct relates to my participation in a conspiracy to commit securities fraud, with the assistance of several individuals at other hedge funds, and indirectly from technology companies,” he told U.S. District Judge Sidney Stein.
Fortuna is one of five people who pleaded guilty in the case involving Galleon Group founder Raj Rajaratnam in which the government so far has identified illicit profits of $53 million.
Cooperating in the investigation are Fortuna, Ali Far, Richard Choo-Beng Lee, Gautham Shankar and Roomy Khan. Their guilty pleas were made public last week.
Fortuna since 2007 traded insider information with Lee, a hedge-fund manager, and two unnamed co-conspirators at New York hedge funds, the government has said in court documents.
Lee, 53, who worked at Steven Cohen’s SAC Capital Advisors LLC from 1999 to 2004, started his firm Spherix Capital LLC in 2007 with Far.
Fortuna’s Statements
Describing his criminal conduct at his Oct. 20 plea, Fortuna said an individual from a hedge fund called him on July 25, 2008, and gave him “material nonpublic information on a technology company,” which he knew was passed to his source “in violation of duties of trust and confidence to the technology company.”
He and his partner at S2 traded on the information “knowing we had received it indirectly from a company insider,” Fortuna said.
From August to October 2008, he said, a woman tipped off Fortuna that a semiconductor company planned to spin off its manufacturing operations, telling him her sources were executives at two public companies.
Danielle Chiesi, a portfolio manager of New Castle Partners LLC, was told about a pending spinoff by a former Advanced Micro Devices Inc. executive, prosecutors said in a criminal complaint against her.
Chiesi later traded on her advance knowledge of the deal, announced in October 2008, and passed it to others, according to the complaint. Former Chief Executive Officer Hector Ruiz is the AMD executive, according to a person familiar with the matter.
Ruiz, 63, hasn’t been charged in the case, and prosecutors don’t say he profited from insider trading. He has declined through a spokesman to comment.
The case is U.S. v. Fortuna, 1:09-mj-01009, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net.
Last Updated: November 10, 2009 00:01 EST
bloomberg.com |
