July 15, 2024

DealBook: Ex-SAC Trader Admits He Evaded Firm’s Rules

A former portfolio manager at SAC Capital Advisors testified Monday that he circumvented an SAC policy that prohibits its traders from talking to public company employees.

Noah Freeman, the former SAC portfolio manager who has pleaded guilty to insider trading, told a jury that he did an end-around the fund’s compliance rules when he struck a compensation arrangement with a tipster who provided him with secret information about publicly traded technology companies.

The tipster, Winifred Jiau, is on trial in Federal District Court in Manhattan on charges that she passed illegal stock tips to several hedge fund traders, including Mr. Freeman, about companies at which she either worked or had inside sources.

Ms. Jiau, a former employee at Taiwan Semiconductor and Nvidia, also worked as a consultant at Primary Global Research, a so-called expert-network firm that connects Wall Street traders to industry experts, including public company employees. Several public company employees have pleaded guilty in recent months to leaking confidential financial data to money managers via an expert-network firm.

The news that SAC had a specific ban against discussions with public company employees comes amid a flurry of negative headlines about the Stamford, Conn.-based hedge fund.

Federal authorities are investigating trading by Steven A. Cohen, the billionaire investor who heads the fund, as well as the fund’s trading surrounding a number of large mergers-and-acquistions announcements.

What is more, Senator Charles E. Grassley, Republican from Iowa, has asked regulators to provide him with data about SAC’s suspicious trading activity.

SAC has staunchly defended its business model and compliance procedures, stating that it is “outraged” by the conduct of Mr.
Freeman and Donald Longueuil, another SAC trader who pleaded guilty to insider trading.

Mr. Freeman also testified that SAC fired him in January 2010 because “my financial results were not as good as they expected them to be.”

This is consistent with SAC’s earlier statements that it had terminated Mr. Freeman because of poor performance.

Article source: http://feeds.nytimes.com/click.phdo?i=e8bcf3f0ece903e2dc3dae72b0e7bb7f

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