'Criminal Club' Fund Manager Said to Plan Guilty Plea
By Bob Van Voris -Apr 13, 2012 8:21 AM ET
Danny Kuo, a former fund manager at Whittier Trust Co. charged in January with participating in a “criminal club” that made almost $62 million using illegal tips to trade in Dell Inc. (DELL), will plead guilty and cooperate with the government, a person familiar with the case said.
Kuo, along with three other men, had entered not guilty pleas in February to charges of conspiracy and securities fraud in federal court in Manhattan.
Manhattan U.S. Attorney Preet Bharara said the ring, which allegedly involved five hedge funds and investment firms, is the largest identified by the U.S. to date tied to a single stock. One trade earned a $53 million illegal windfall for Level Global Investors LP co-founder Anthony Chiasson and the fund, prosecutors claimed.
Bharara has called the group “a criminal club, whose purpose was profit and whose members regularly bartered lucrative inside information.”
The three other men who pleaded not guilty in February are Chiasson; Todd Newman, a portfolio manager formerly at Diamondback Capital Management LLC; and Jon Horvath, an analyst at hedge fund Sigma Capital Management LLC. Three additional men pleaded guilty and are cooperating with the government. Jerika Richardson, a spokeswoman for Bharara’s office, didn’t immediately return an e-mail seeking comment. The person familiar with the case declined to be identified because the matter isn’t public. The plea was reported earlier in the Wall Street Journal.
The case is U.S. v. Newman, 12-cr-121, U.S. District Court, Southern District of New York (Manhattan).
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