Ex-SAC Employees Are Charged in U.S. Insider Probe

The charges are connected to earlier arrests of eight employees or consultants at Primary Global LLC, a Mountain View, California-based firm that links investors with employees of public companies who work as consultants...

Ex-SAC Employees Are Charged in U.S. Insider Probe
February 08, 2011
By David Glovin, Patricia Hurtado and Saijel Kishan
Bloomberg

Former SAC Capital Advisors LP junior portfolio managers Noah Freeman and Donald Longueuil were charged with insider trading while working at the $12 billion dollar hedge fund, part of the latest round of charges in a nationwide crackdown by federal prosecutors.

Longueuil, who worked at SAC Capital unit CR Intrinsic from July 2008 to July 2010, was arrested this morning. Freeman, who worked at SAC Capital from June 2008 to January 2010, pleaded guilty yesterday as part of a cooperation agreement with prosecutors.

The two others charged by Manhattan federal prosecutors were Samir Barai, the founder of Barai Capital Management, who surrendered to authorities this morning, and Jason Pflaum, who worked for Barai and pleaded guilty yesterday as part of a cooperation deal.

“They took the concept of social networking and turned it into a criminal enterprise,” U.S. Attorney Preet Bharara said at a press conference today detailing today’s charges.

The arrests in what prosecutors called a four-year scheme signal an expansion of a 16-month attack on insider trading on Wall Street that U.S. Attorney Preet Bharara said is “rampant.” The criminal complaint refers to six hedge funds, which it doesn’t name, that employed the defendants or executed trades.

‘Egregious Violations’

“We are outraged by the alleged actions of two former employees, which required active circumvention of our compliance policies and are egregious violations of our ethical standards,” Stamford, Connecticut-based SAC said today in a statement.

“The government alleges that their improper conduct together began at their prior firms in 2006 and continued after they joined SAC in mid-2008,” SAC said in the statement. “They were employed at SAC for a short time and were dismissed in January 2010 and June 2010, respectively, due to poor performance. SAC is continuing to cooperate with the government’s investigation.”

The charges are connected to earlier arrests of eight employees or consultants at Primary Global LLC, a Mountain View, California-based firm that links investors with employees of public companies who work as consultants...