One of the themes that has run through the FBI's insider trading investigation is that people being indicted have an association with SAC Capital, one of the largest hedge funds in the world. SAC stands for Steven A Cohen, the founder of the very successful fund. Since 1992, SAC Capital has averaged 30% returns with one down year in 2008 of -19%. Within the hedge fund community, it has been rumored that the whale of the probe is SAC Capital.
This past week two ex-fund managers, Noah Freeman and Donald Longueuil, were arrested. Two other people were arrested from Barai Capital - Samir Barai and and an analyst, Jason Pflaum. Freeman and Pflaum have pleaded guilty. Freeman has said that expert networking firms, such as Primary Global, gave him the insider tips (Bloomberg source). The SEC has estimated that the trades had led to $30 million of gains or losses avoided. A list of the eleven stocks, mostly in the technology sector, that may have been traded using material non-public information is here. The four also tried to hide their trails by destroying computer hardware, deleting emails and shredding paper. Read this Wall Street Journal article for details.
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