In January 2012, the SEC filed an insider trading case against Level Global, its co-founder Anthony Chiasson, a former analyst Spyridon ‘Sam’ Adondakis and six others, including five investment professionals and the hedge fund advisory firm Diamondback Capital Management.
In its complaint to the federal court in Manhattan, the market watchdog said that Adondakis obtained the financial performance information of Dell and Nvidia, prior to being made public, during 2008 and 2009.
The accused then passed the information to Chiasson, who used it to carry out trades on behalf of hedge funds managed by Level Global and gathered millions of dollars in illicit profits.
SEC New York regional office senior associate director Sanjay Wadhwa said that the insider trading at Level Global was not a single incident, rather it happened again and again, and involved multiple companies and several quarterly announcements.
"This settlement serves as another reminder that the SEC will hold hedge fund managers accountable when their employees violate the securities laws," Wadhwa added.
Level Global revealed intentions to close the business and return money to its investors, following reports of the government’s investigation in 2011.
Subject to court approval, the settlement with Level Global requires to disgorge $10,082,725 in fees that it reaped from the alleged insider-trading scheme, to pay prejudgement interest of $1,348,824, and to pay a penalty of $10,082,725.
