June 17, 2024

DealBook: Former SAC Manager Pleads Guilty to Insider Trading

Donald Longueuil, a former portfolio manager, pleaded guilty to insider trading.Louis Lanzano/Bloomberg News Donald Longueuil, a former portfolio manager at SAC Capital Advisors, pleaded guilty to insider trading.

8:07 p.m. | Updated

As the jury continued to deliberate in the trial of Raj Rajaratnam, the government notched another guilty plea in its investigation of insider trading at hedge funds.

Donald Longueuil, a former portfolio manager at SAC Capital Advisors, pleaded guilty to conspiracy and securities fraud before Judge Jed S. Rakoff in Federal District Court in Manhattan.

He is the fifth individual to plead guilty in the government’s investigation of so-called expert network firms. These firms serve as matchmakers, connecting traders to the employees of publicly traded companies who are paid to provide insights into their businesses.

Mr. Longueuil, 35, said he purchased stock in the Marvell Technology Group after receiving secret information about the company’s earnings before they were publicly announced. He also admitted to destroying his hard drive, which contained incriminating evidence.

Under an agreement with prosecutors, Mr. Longueuil faces a prison sentence of 46 months to 57 months. Judge Rakoff could depart from those guidelines. Mr. Longueuil also agreed to forfeit $1.25 million at his sentencing, which is scheduled for July 29.

“I am sorry for my actions, and the pain that I have caused my family and loved ones,” said Mr. Longueuil, choking back tears. “I have learned a lot from my experience, and I look forward to applying these lessons as I move forward with my life.”

Federal prosecutors arrested Mr. Longueuil, 35, in February along with Noah Freeman, another SAC Capital portfolio manager; Samir Barai, the head of Barai Capital Management; and Jason Pflaum, an employee of Mr. Barai’s. Mr. Freeman and Mr. Pflaum are cooperating with the government; Mr. Barai has not yet entered a plea.

Neither SAC nor its billionaire founder, Steven A. Cohen, has been accused of any wrongdoing. At the time of their arrest, SAC said it was “outraged” by the conduct of Mr. Longueuil and Mr. Freeman.

Mr. Longueuil said he received illegal stock tips from 2006 to last year and pleaded guilty to purchasing Marvell stock in May 2008 based on inside information from Mr. Barai. According to court filings, the source of that original tip was Winifred Jiau, a former employee of Primary Global Research, an expert network firm. Ms. Jiau has pleaded not guilty to conspiracy charges.

Judge Rakoff scheduled Mr. Longueuil’s sentencing for July 29. Mr. Longueuil, whose travel had been restricted to New York and Connecticut, was granted a special request to travel next week to Sarasota, Fla., for his future mother-in-law’s 60th birthday party.

Mr. Longueuil’s midday court appearance provided a ready distraction for the lawyers and reporters awaiting a verdict in the trial of Mr. Rajaratnam, the co-founder of the Galleon Group hedge fund.

As the fourth day of deliberations wore on, the tense atmosphere surrounding the trial surprisingly began to ease.

Reed Brodsky, a prosecutor, chatted up the media as he entered the courtroom. Andrew Michaelson, another prosecutor, stood in the hallway also shooting the breeze. John M. Dowd, a lawyer for Mr. Rajaratnam who has shown a cantankerous side during the trial, also proved more affable on Thursday, regaling reporters with stories about his past trials and discussing plans for his coming vacation on Cape Cod.

Article source: http://feeds.nytimes.com/click.phdo?i=43663eb73f7b1df0fecf5043d73e72da

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