Arrests tied to the insider-trading case involving Galleon Group LLC made obtaining illegal tips harder and often less specific, an analyst for former Diamondback Capital Management LLC fund manager Todd Newman testified.
'It certainly changed things', Jesse Tortora testified last week at Newman’s insider-trading trial in New York. 'It made it more difficult. Everybody was anxious. Everybody was nervous. Information became less frequent and less specific. People were a little bit reluctant to talk to each other'.
Bloomberg reports that Newman is on trial in federal court with Level Global Investors LP co-founder Anthony Chiasson. They are charged with using a 'corrupt chain' of insiders at public companies to make more than $70m for their funds by trading on illegal tips about Dell and Nvidia Corp. The men pleaded not guilty to securities fraud and conspiracy. The most serious count of securities fraud carries a maximum term of 20 years in prison.
Tortora, who worked for Newman from 2007 to 2010, is the government’s first witness. He has told how he obtained nonpublic information from company insiders and passed it to Newman and his friends. Tortora said Newman paid as much as $2.25m in 2008 and only about $40,000 in 2010, the year he left the firm.
The New York Post reports that Tortora testified that the only time he made his 'moody' and 'verbally abusive' boss happy was by leaking him illicit stock tips.
Tortora, 35, told the jury last week that Newman benefited from corporate secrets he gleaned from pals.
Tortora said his already rocky relationship with his boss grew worse after a widespread crackdown on insider trading on Wall Street led to the arrest of Rajaratnam in 2009. The arrests made it harder to get tips.