Feds' charges target insider trading

Federal authorities Wednesday charged a "criminal club" of hedge fund executives with making more than $61 million in insider trading profits on a single stock and said the case was the latest sign of a criminal epidemic afflicting Wall Street.

The accusations "paint a stunning portrait of organized corruption on a grand scale," said Manhattan U.S. Attorney Preet Bharara. "Today's charges illustrate something that should disturb all of us: They show that insider trading activity in recent times has, indeed, been rampant and routine."

Bharara's office has secured 56 insider trading convictions in the last few years, including a $75-million scheme involving Galleon Group founder Raj Rajaratnam, and other cases focused on the California "expert networking" firm Primary Global Research that linked company insiders with traders.

Wednesday's charges -- part of a probe the FBI calls "Operation Perfect Hedge" -- accused a circle of hedge fund traders who knew each other with exploiting information from an unnamed insider at Dell Computer on upcoming earnings reports in 2008 and 2009 to make a killing.

Some of the inside information was allegedly exchanged via email. In the most spectacular trade, prosecutors said Anthony Chiasson of Manhattan -- identified by the SEC as a portfolio manager at Level Global Investors of Greenwich, Conn. -- made a $53-million profit in 2008 by short-selling Dell before a negative earnings report.

Bharara described the traders as "a corrupt circle of friends who formed a criminal club," and his office said the total profits of $61.8 million from Dell made it the largest insider trading scheme involving a single stock that they were aware of.

In addition to Chiasson, 38, the defendants included Spyridon Adondakis, 40, and Jon Horvath, 42, of New York City; Sandeep Goyal, 39, of Princeton, N.J.; Jesse Tortora, 34, of Pembroke Pines, Fla.; Todd Newman, 47, of Needham, Mass.; and Danny Kuo, of San Marino, Calif. Goyal, Tortora and Adondakis pleaded guilty last year and have been cooperating in the probe, prosecutors said. Kuo was to appear in court in California late Wednesday, and the other three were released on bail at their initial appearances.