Government Makes Arrests In Insider Trading Probe
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There are developments today in the federal government's investigation into insider trading on Wall Street. Seven more people have been charged. They include analysts and traders at some of Wall Street's most prominent hedge funds.
NPR's Jim Zarroli has the story.
JIM ZARROLI, BYLINE: U.S. officials said the seven people charged made up a stunning portrait of organized corruption on a grand scale. At the center of the scheme was an unnamed employee at the computer company Dell. That employee allegedly passed on inside information about earnings to an investment analyst named Sandeep Goyal, who is cooperating with the government.
Goyal gave the information to an analyst at the hedge fund company Diamondback Capital Management, for a fee of $175,000. That analyst passed it on to other hedge funds.
Assistant FBI Director Janice Fedarcyk says the fact that they had access to Dell's earnings before the market as a whole enabled them to earn millions in elicit profits.
JANICE FEDARCYK: When you have the answer sheet beforehand, it's pretty hard not to ace the test, but cheating on the test and getting away with it are two different things.
ZARROLI: Of the seven people charged, three pleaded guilty. The others include Anthony Chiasson, a cofounder of the hedge fund company Level Global Investors. Also named were Todd Newman of Diamondback and John Horvath of Sigman Capital Management, which is part of one of the most prominent hedge fund companies on Wall Street, SAC Capital. Another defendant, technology fund manager Danny Kuo is accused of passing on inside information to the others about the technology company NVIDIA.
None of those charged was available to comment today. U.S. attorney Preet Bharara said the arrests say something that should disturb people.
PREET BHARARA: They show that insider trading activity in recent times has, indeed, become rampant and routine and that this criminal behavior was known, encouraged and exploited by authority figures in several investment funds.
ZARROLI: With today's arrests, the government's investigation into insider trading has grown wider. Sixty-three people have now been charged. Fifty-six of those have been convicted.
Jim Zarroli, NPR News, New York.
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